Considering the move into a retirement village, but don’t want to pay a DMF? Now you don’t have to
Our largest village operator Lendlease has announced they will be offering four different contracts across most of their 71 villages within the next 12 months.
Incoming residents will still be able to pay the Deferred Management Fee (DMF) – where you pay an ingoing fee plus a DMF of around 30 to 35 per cent of the sale price and selling costs when you leave the village.
But there will now be three new options:
- ‘Pre-paying’ an upfront management fee of around 18 per cent plus any selling and reinstatement costs. You receive 100 per cent of the sale price when you depart the village;
- Paying a higher ingoing fee and receiving a ‘money back guarantee’ on a set amount eg $550,000. This is then repaid within 60 days of leaving on top of a non-refundable establishment fee of three per cent upfront; and
- Paying as you go, where you pay ‘rent’ with no ingoing fee or DMF, plus the same weekly fees as other residents (this is currently only available on serviced apartments, but will be rolled out to the wider market).
More choice for consumers
They are not the first operator to offer an alternative to the DMF. As we covered here, Stockland has started building retirement villages where residents pay all their costs upfront, but own the home and land and keep any capital gains when they sell.
But it’s great to see more choice coming onto the market.
Interestingly, Lendlease says around 80 per cent of their residents taking up new contracts are still opting for a DMF.
We can see why – you pay a smaller upfront fee plus a weekly fee to cover the cost of maintenance and access to the village’s community facilities, leaving you with more in the bank – and more time – to enjoy your retirement.
Either way, it’s more options for everyone.