Retirement village resident who left after 16 months faces $95,095 loss after quitting noisy villa

A retirement village resident who left her place three months ago due to constant traffic has been told she will forfeit $95,095 for 16 months’ occupation, and she is awaiting repayment.

Di Sinclair, Retirement Village Residents Association vice-president, said the case highlighted unfair practices.

Older people could lose large sums of money if they left a village, said Sinclair, who handled 168 complaints from residents last year.

The association is the lobby group for residents.

The resident, known only as Anne, aged 78, paid $715,000 for a licence to occupy a villa at a property which Sinclair said could not be identified.

But, after about 16 months, Anne found her location unsuitable due to constant passing traffic.

The villa was exposed to a significant volume of noise, with vehicles travelling past both the front and side throughout the day.

“There were 100 vehicles per day that went past my place,” Anne told the Herald.

That included loud diesel utes.

She did not know about the traffic volumes when she looked at the villa and had left a lifestyle block where she heard no traffic.

Sinclair said that after having exhausted all reasonable efforts to adapt to the situation, Anne concluded that she could not continue living there.

“She decided to leave. Before vacating, she explored transferring to another unit but was advised that no suitable alternative was available,” Sinclair said.

On exit, Anne was told she would incur a deferred management fee deduction of $95,095 for 16 months of living at the village.

In accordance with the occupation right agreement, a fee of 13.3% was deducted from her capital sum.

While the administration fee would be waived, she will incur a deduction of $95,095, Sinclair said.

That was a large amount for an older person, Sinclair said, and unfair because it would make it hard for Anne to buy a home.

Sinclair said Anne was continuing to face other high costs:

That is despite her no longer living in or benefiting from the village.

“She contacted us for help and I wrote a letter to the owner requesting that village fees cease because she was experiencing considerable financial inconvenience.

“I also pointed out that many operators have adopted the practice of ceasing fees on exit,” she said.

But her request and appeal on hardship and compassionate grounds were declined.

“They did make a concession that Anne would not have to pay the fees upfront, but they would accumulate and be subtracted from her eventual payout when the villa is finally sold,” Sinclair said.

The leading retirement village operators, known as the ‘big six’ had stopped charging weekly fees after exit, Sinclair said.

That practice of not charging fees after departure is to become law in a review of the existing legislation, Sinclair said.

However, there are still many owner-operators who charge weekly fees after people leave.

“This is usually at the rate of full fee for the first six months and 50% for the following six months unless they have relicensed the unit in the meantime,” Sinclair said.

The organisation which represents owner-operators said such complaints needed to be kept in context.

Anne told the Herald: “People don’t know about these situations. I hope my case helps highlight what’s going on. Many other people said they felt trapped by those fees. They would not be able to buy another home if they left because they would lose 32%.”

The 30% was the fee, plus another 2% as an administrative fee.

Michelle Palmer, executive director of the Retirement Villages Association, which represents owner-operators, indicated obligations were clear in contracts.

“This is a contractual matter between the resident and the village operator. The occupation rights agreement would have specified the terms and the deferred management fee.

“Under the law, incoming residents are required to seek independent legal advice before moving into a village,” Palmer said.

Overall, few complaints were made in the sector.

“It is also important to keep the number of complaints in context,” Palmer said of Sinclair getting 168 complaints last year.

That was less than a third of 1% of total residents, Palmer calculated.

Anne Gibson has been the Herald’s property editor for 26 years, written books and covered property extensively here and overseas.