If you are planning to move into a retirement village soon, there might be different elements involved that could create confusion. One of them is the various models that are under retirement villages especially the element that concerns your ownership of a unit.
In Australia, there are various models being used such as company title, license, leasehold and freehold. According to a property lawyer Danielle Lim who specializes in MinterEllison’s retirement living, majority of the retirement villages adopt the leasehold and license arrangement model of ownership.
It is a fact that not many understand the legality behind every model and the differences that differentiates each of them. For retirement villages, leasehold ownership is different than the regular rental property.
According to Lim, the existing law dictates that when a person bought the right to live under a unit within a retirement village while following the leasehold ownership, they are not subjected to stamp duty.
She clarified that leasehold grants the resident an interest for the unit they have leased which is normally referred to as a life interest. This usually lasts for 99 years. Within that time, the resident has substantial rights to the unit such as exclusive ownership of the said unit.
Freehold is another ownership model and also referred to as strata. With this arrangement, the resident is required to comply with stamp duty. There is a restriction with regards to selling, unlike the regular residential property, since the unit is under a retirement village.
Lim explained that with regards to freehold arrangement, the resident has outright ownership of the unit in the retirement village. The residents may also be given exclusive rights to use either a storage space or a parking space.
The only thing is that a freehold has a limitation when it comes to selling the unit. The buyer should meet the requirement set by the retirement village such as the age of the buyer and someone who is not capable of living independently.
This is why it is important to consult a company such as shine retirement that will guide you in choosing the right retirement village.