Retirement village operator, Aveo, has been accused of pressuring residents over redevelopment plans.
The village in question is a 75 villa retirement village in Free Street, Newmarket, Brisbane.
Aveo have started discussions with residents about their desire to replace the 75 villa retirement village with a 300 unit multi-storey development.
Last week, on Brisbane’s 612 ABC Radio Station, Spencer Howson interviewed:
- Alison Quinn, Executive General Manager of AVEO
- A representative of Save Our Space (SOS), the group formed to oppose the proposed change.
To hear the interview, go to: http://blogs.abc.net.au/queensland/2015/03/retirement-village-accused-of-pressuring-residents-over-redevelopment.html.
One of Spencer’s first questions related to how the retirement village contracts worked. Clearly there are legal issues that can only be answered after reading the retirement village resident’s contracts.
However, let’s put the legalities aside for a moment. In my opinion, it’s a question of lifestyle.
It’s a question of ‘lifestyle’
Each of the residents will have bought their retirement village unit for a price at or around market value for a similar unit in the Newmarket area.
However, they will also have agreed to pay a deferred management fee (DMF). This deferred management fee is usually charged as a percentage of their purchase price (for example 3.5%) for every year they live in the village. The fee will be paid when they leave the village, using the proceeds from the sale of their unit.
So, if a resident purchased their unit for $300,000 and pays a DMF of 3.5% per annum, they would pay a DMF of $10,500 for every year they lived in the village.
So, why would someone agree to pay this fee when they could purchase a unit outside the village without having to commit to the deferred management fee?
They pay this fee, because they are buying themselves a lifestyle.
Read the first three sentences on the Aveo website home page and you’ll see the emphasis on this concept of a retirement ‘lifestyle’.
“Aveo Live Well retirement villages balance convenience and independence with an enviable lifestyle. Through care, skill and dedication we have been refining what it means to “live well” for over 20 years and are proud to be Australia’s leading provider of retirement lifestyles. Since 1990, our portfolio has grown to 75 retirement villages across Australia offering a wide choice of lifestyles.”
Now, this concept of a retirement ‘lifestyle’ is fairly difficult to define.
However, we can probably all agree, Aveo included, that it doesn’t involve moving residents from their units, knocking down their homes, digging up their back gardens, and moving them back into multi-storey units at some point in the future.
Aveo are at pains to explain that nothing will happen without the consent of residents. Alison says they have no ability, nor intention, to alter the resident’s right to live in their retirement village unit for life. And that’s very important.
But surely it comes down to more than consent.
Those that agree with the changes are apparently happy to move to alternative accommodation in the meantime, or live with the construction phase of the project. Presumably, they like the thought of a brand new unit enough to undertake the transition.
But what about those who aren’t happy to move? As Alison points out, Aveo is unlikely to get 100% agreement with the proposed changes.
These residents are paying thousands of dollars per year to live an ‘enviable lifestyle’. Normally, this would include, at a minimum, a gated community, with people of a similar age, where there are rules in place to ensure they can live a quiet, peaceful, stress-free existence.
The interview mentions $2,000 credit card incentives to those who sign-up. But what is $2,000 compared to the thousands of dollars these retirees will pay out in deferred management fees for something they never received – an enviable lifestyle for the duration of their retirement years.
They signed up to the promise of ‘the freedom to live life’, ‘security and independence within a great village community’, ‘general day-to-day maintenance taken care of’ and ‘more time to enjoy what life has to offer’.
And what about residents who need to sell their unit before or during the construction phase?
There will be significant impacts for those who need to sell their unit before or during the construction phase. You see, the deferred management fee is taken from the price the retirement village resident receives when they sell their retirement village home.
Let’s look at what Aveo’s website says about selling your retirement village home. This excerpt was found in their Frequently Asked Questions section.
What happens to our home if we decide to leave? How is the resale price calculated and are there any restrictions on who can buy?
The market determines the value of any residential property but in a retirement village, there are some factors which add value to resale potential. Stable management, attractive surroundings and relevant services and activities all influence buyers. The only restriction is that buyers should be aged 55+.
So, stable management, attractive surroundings and relevant services can add value to resale potential. But what happens when you are selling a retirement village unit in the middle of a construction site?
Has Aveo offered to buy residents out in this situation? And if so, who and what determines fair market value?
Currently, I cannot find any units for sale at Aveo Newmarket. In fact, I can’t find any mention of Aveo Newmarket on the Aveo website.
It is common for retirement village residents to believe that their retirement village unit will be their last home. However, that is not the case in most instances. Most move from their retirement village unit to a higher level of care.
This is a particularly vulnerable and sometimes traumatic time for residents and their families. Residents usually have to pay a bond to move into a higher care facility. They need access to as much of their money as possible, as quickly as possible, at this time.
Retirement village units traditionally take longer to sell than normal residential properties. Obviously, retirement village units in the middle of construction sites are likely to take even longer.
If the development goes ahead, Aveo needs to consider the ‘next stage’ for their residents. Plans should be put in place to transition those residents who need to sell their units before and during the construction phase.
Residents should not be disadvantaged by something they have absolutely no control over.
Aveo are a successful retirement village operator. For over 20 years they claim to have been refining what it means to ‘live well’ through care, skill and dedication.
If they apply these values during the community consultation phase of this project, perhaps they can attain the 100% agreement they presumably hope for. If not, these same core values need to be applied in support of those residents who, at 75+, just don’t want to deal with the changes – let’s face it, it’s not what they signed up for.
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To read a further article in the Quest Community Newspaper, go to: http://www.couriermail.com.au/questnews/city/aveo-upgrade-raises-nursing-home-residents-concerns/story-fni9r0jy-1227255375054?sv=c20c006788942f1043326301e0d788b6
To find out how to get the best possible deal on ANY retirement village home, go to www.retirementvillageinfo.com.au.
Image: (CC) Ell Brown/Flickr
18 November 2016.
I had an interesting experience in past hour. I had known AVEO had some adverse publicity about its Veronica Gardens (Northcote) Victoria) Village. Just the same I was making enquiries about an advertised Open Day (to take place tomorrow 19th), and to find out if 2 units advertised on realestate.com.au would be open for me to look at. Up popped a “chat” thing on side of my screen. I thought I would engage, and asked my simple question. The ‘chat’ person then informed me that the Open Day was not on and in fact the units were no longer for sale, and that no units would be sold for at least two years due to some redevelopment. Now I went onto their website to search for any notification or news about any developments at Veronica Garden. I had not received an answer when I asked ‘What developments”. Nothing that I could find explained anything at all was going to happen there. I said to the ‘chat’ person that I was surprised that such a large company and a growing company would suddenly withdraw properties from market and cancel an Open Day with virtually no notice. I was told that both the Open Day and the properties were being removed from website ‘as we speak’. Strange indeed.
Hi Wendy. Thanks for your message. It did seem strange, so I gave them a call at the village and asked them what time the Open Day would commence. They said it would be at 12 noon and the sales agent would be on-site at that time!? As you say, strange indeed.
I should also say thank you, Wendy. Those of us living at Veronica Gardens can now plan for the future.
You’ll smile when you hear what Angela Buckley (Aveo’s Executive General Manager – Retirement) said at the Veronica Gardens AGM in December. Asked about Cindy Mantle’s email, her reply was curt: “She was misinformed.”
If it looks like a duck, and sounds like a duck….
The planned development has now been confirmed in an email (6 Dec 2016) from Cindy Mantle – Aveo’s Customer Service Centre Team Leader, Retirement. I quote: “Aveo’s ongoing commitment to providing our residents with a modern and sort after (sic) lifestyle means a small number of our communities are currently in the planning stages for facility upgrades. Aveo Veronica Gardens falls into this category.”