Retirement villages: what you need to know

ORAs and DMFs

First of all, when you buy into a village you typically buy an ORA (occupation rights agreement) which means the right to live there.

You're not buying the land or the building and you won’t get capital gains.

There are other models out there but that's the most common.

After a period of time, usually between two to five years, you will pay a deferred management fee or a DMF.

This is typically 20-30 per cent of your original capital.

I talk to residents who are happy in the village they're in and see the DMF as the price for being where they want to be.

I talk to others who have had a problem because they decided they wanted to move.

After you've paid the DMF the amount left may not be enough to buy into another village or get back into the property market.

Key Questions

There are some other key questions for you which you will find answered in the ORA and the disclosure statement.

  • Is the weekly fee fixed or will it increase year on year?
  • Will you be able to take your pet?
  • Are all the amenities listed in the sales materials actually built, and there, or still under construction?

Many modern villages have a pool and a gym, some have a cinema, hairdressers, and happy hour in the bar.

Just check what's there and what's still coming.

  • Always check the village is registered
  • and that it is a member of the Retirement Villages Association.

Both of those things offer you protection.

Need to know more?

The Commission is running free seminars for people thinking about living in a retirement village, with the details of where and when on our website.

We are a neutral source of information and it’s a great opportunity to ask questions.

The Retirement Commissioner is carrying out a three-yearly review of retirement income policies and would like to hear from you.

The answers you give to this short survey will feed into the recommendations she makes to the government.

Click here for the survey.

Editor's note: Views expressed by contributors are not necessarily those of the Office for Seniors