If you presently live in a Retirement Village community or are looking to move into a Retirement Village in the future, you will be interested to know that there has been a recent amendment to the way in which exit fees are calculated under the Retirement Villages Act 1999 (Qld)(“the Act”). The Act was amended on 1 March 2012. The main purpose of amending the Act was to clarify the calculation of exit fees.
An exit fee is a payment that a resident is required to pay to the Scheme Operator upon leaving the Retirement Village. Normally, the exit fee is calculated as a percentage of the Ingoing Contribution paid by the resident or a percentage of the resale price, which is the Ingoing Contribution paid by the next resident. The percentage is determined by the length of time that a resident has resided in the village.
Prior to the amendments, the length of time was calculated on a yearly basis and the exit fee percentage increased yearly to a maximum percentage. For example, if you resided in a unit for one year and one day, you would pay an exit fee percentage based on two years of occupation, because you occupied the unit for more than one year. Therefore, if you stayed in the unit for two full years, you would pay the same exit fee as if you stayed in the unit for one year and one day.
Since the amendment, exit fees are still based on the length of time that you have resided in your unit, however instead of the exit fee being calculated on a yearly basis, it is now calculated on a daily basis. Therefore, if you resided in your unit for one year and one day, you would be charged the full percentage for the first year and a daily percentage for the one day that you resided in your unit during the second year.
If you entered into a contract with your Retirement Village prior to the amendment to the exit fee calculation, then the exit fee must be calculated on a daily basis unless the contract provides a way of working out the exit fee that is not on a daily basis. For all contracts entered into with Retirement Villages after the amendment, the exit fee must be calculated on a daily basis.
We are sure that these amendments to the Act will align with most residents’ expectations.