Most of us go through a succession of homes in our lives – we grow up in our parents’ home, move into a bachelor(ette) pad, set up house with our spouse, raise our kids and launch them from our family home, downsize into a unit or retirement village and, maybe, end our days in aged care.
That journey is, among other things, a financial investment journey: we save, buy a small property, save some more, increase our investment and then, at downsizing time, hopefully have a little profit to spend on ourselves while still having enough in the bank to fund our aged care needs.
In short, for most of us, a significant part of our lives goes toward building a solid financial asset in our home. For many of us, it’s the largest single asset we own.
So imagine you’ve chosen to buy a unit in a retirement village thinking its capital value will provide you with the refundable accommodation deposit (RAD) for the nursing home you hope not to need. You’ve bought the property and own the title knowing that, when you sell, you’ll be responsible for the costs of bringing everything up to scratch and that the village will take its “deferred management fee” (up to 30%) from the proceeds of the sale before you get it. You’ll want to sell for the best possible price – RADs typically range from $300k to $600k per person (not per room!) so you’re looking for a good sale!
Then imagine, while you’re living happily in the village, the owner sells it to Aveo and you’re faced with the problems of residents at Veronica Gardens. They have lodged a submission to the Victorian Legislative Council’s Inquiry into the Retirement Housing Sector expressing serious concern about the new service agreement which, they allege, “…makes it virtually impossible to sell through or to anyone but Aveo…” because Aveo, as the village manager, claims the right to approve, or not, any sale. It’s hard to imagine how you would expect to get a fair price when the only purchaser in the market has the right of veto on the sale!
Residents attending a recent meeting at Veronica Gardens came from other Aveo villages as well with similar concerns about the financial constraints being imposed on their properties. Law firm Levitt Robinson was represented and, according to Adele Ferguson‘s report in The Age on Wedneday, August 3, are offering (at least those residents) free advice about service agreements.
I have referred similar stories from residents at another Aveo village to the inquiry. If you would like to make a submission, or tell of a similar experience, at an Aveo village or another operator’s, to the inquiry, follow this link.