Retirement village units are designed for older, retired people, so you can safely assume that any unit you consider is going to be pretty much exactly what you need. However, some people might like to move in and make changes to the home. Is this allowed?
Sure it is. Kind of.
Before you move into your retirement village unit, it will be “refreshed” as a minimum (fresh paint, new carpet, deep clean and repairs), or will undergo a full renovation, which could be as extensive as a new kitchen and bathroom. These works are designed for you to move in with nothing to do.
However, you may move in and want to make changes. Some of the most commonly requested changes include:
- Installing plantation shutters
- Installing solar panels
- Converting the garage to a utility room
- Installing handrails
- Replacing or installing kitchen appliances
- Installing additional shelving or cupboards
Your residence contract will note that you need permission from the village operator to make any alterations to your unit. The village operator will usually approve your work request, provided it doesn’t damage the structural integrity of the building and doesn’t impact the visual appeal of the unit or make the unit look inconsistent with the remainder of the village.
The last word
The permission is normally given on the condition that when you leave, the items you installed are removed and the area “reinstated” or “made good” at your expense. There will also be conditions to the effect that the village operator may choose to retain the changes if they think it adds value to the property, and that they do not have to pay for the installed items. For example, a resident installs plantation shutters to the unit. When they leave, the village operator decides to keep them in place. The village operator does not have to pay for these. If the resale value is increased because of the shutters, the upside will be shared according to the contract terms around the sharing (or not) of capital gains. Either way, the village operator will receive most if not all of the value the shutters may add to the property.
My takeaway point here is that you should not make alterations to your retirement village unit to “add value” in the hope that it increases the resale price. Only make alterations that will enrich or enhance your life while you are living in the unit.
An interesting example:
Margaret has decided on a unit in a village but wants to make some change to the unit before she moves in. She wants to swap cupboards for drawers in the kitchen, replace the laminate benchtop with a contemporary stone benchtop, and lay high-quality vinyl planking on the bedroom floor instead of carpet.
The cost of this work is around $40k, roughly 10% of the unit purchase price.
Margaret is signing a contract where she receives no capital gains at exit. She is early 80’s in age.
My advice to Margaret was to approach the village operator and ask for a discount on the purchase price, given she is doing work that they will have to do at their cost when she leaves. The full amount would be nice, but a discount of $20k would be acceptable.