Modern lifestyles are based so much on consumerism and having ‘more’ it is easy to forget the freedom that comes with having less. When the kids are well and truly off your hands and you’re no longer working full time, the large family home can suddenly become an invisible ball and chain. It might just be time to make a change in your living arrangements. Holly Richardson takes a look at the myriad of options available to Australians. 
Here in the ‘lucky country’ we really are spoilt for choice. Firstly, you need to decide what you want your ideal lifestyle to be. The most popular option for many is to sell the big house and buy an apartment or unit near something you love, such as friends, family, the bush or the sea. For others the freedom of a motor home and ever-changing views is just too good to pass up. Some take this a step further and move onto a cruise ship where the costs are all-inclusive and the views are international.
Moving in with family or a village with friends is also very appealing and in the long-term a smart choice. But before making the plunge, be sure to ask the right questions and choose the right living arrangement for your optimum lifestyle. Of course, remember to stay within your budget and keep some finances safely tucked away.
If you still have a mortgage remember more rate rises are predicted. Reserve Bank Governor Glenn Stevens says, “If you are in a $600,000 house and you can’t afford $90 more a month on the mortgage, you don’t need a financial advisor, you need a smaller house.”
Bush, Beach or City?
Some people dream of moving to a block in the country or a house near the beach for their retirement. If you are thinking of moving somewhere new for your retirement – do your homework. Your health and mobility or that of your partner may be fine now, but will you be able to cope with the maintenance of a rural block as you get older? What about your friends and family – will you be able to stay in contact with them? If relocating involves selling your house or unit, then seek advice on the implications for your pension and or taxation.
The Department of Consumer and Employment Protection has produced a publication called The Homebuyer’s Survival Guide, which includes advice about housing options for people over the age of 55. They recommend you ask to yourself some of these questions before deciding to move:
- What public transport is available at the new location?
- How close are the shops?
- What medical facilities are there?
- What recreational facilities are available?
- Will you see your friends and family as often as you would like?
- Can you afford the costs involved with to visit family and friends or access medical services?
- Are there any restrictions about keeping pets?
- Will the new home be suitable for grandchildren to visit you?
- How much will council and water rates be and will you get State Government concessions?
What Does Downsizing Involve?
Financial advisors from SunSuper reminds us that it does not just involve the selling of your house and moving on, but the reducing of the amount of belongings you have accumulated over the years. Review your possessions and match them to your new lifestyle or living space. Downsizing can be a scary thought but if you think about what you really use in your home on a day-to-day or week-to-week basis it amounts to a fraction of what is in your home.
Why not start with areas of the house you’re currently not using and work on removing large items first. You could even use different coloured stickers to mark what you keep, what you give away to charity or family and friends, what you sell and what you throw away.
Moving to a Apartment or Unit
Mr Jack Bao Principle of Local Property says when making the move it is vital that you are clear on what you are looking for and that your finances are organised. As you look you may find some of the things you identified at the start may change. This is quite normal. Be prepared to change what you require as you gain a realistic picture of the property market.
Write down a list of your requirements. You might want to consider: What area or suburb do you want to buy in? Do you want a terrace, semi, apartment, unit or townhouse? How many bedrooms and bathrooms do you need? How much storage space do you need? Do you need car parking or a garage? Do you want a garden, courtyard or balcony? Do you need to be near public transport? Do you have any special needs e.g. level access, room for a home office? What are you able to pay? Is this realistic?
Organise your finances and find an experienced solicitor or conveyance. Make sure you know how much you will be getting for your current home (consider selling first) or that you have loan approval from your bank or lender before you make an offer. Some finance providers will not give final approval until they have seen the Contract for Sale of the property and obtained property details.
Prepare a list of costs. Don’t forget to allow for additional costs such as stamp duty on the contract, mortgage stamp duty and solicitor’s or conveyancer’s fees. You’ll also need to think about other hidden costs such as moving fees, insurance and adjustments to rates and levies on settlement. Find a solicitor or conveyancer who is experienced in conveyancing and check how much they will charge you. Check whether the fees charged include disbursements such as title searches, photocopying and other searches.
Research and take time to look for a suitable property. Be a smart consumer and do your research. This will take time and may involve looking at a number of properties over weeks and months, especially on weekends. Contact several real estate agents, brief them on any special requirements. Always be aware that the seller appoints the agent and as such, agents must act in the seller’s interests. Sometime it helps to take a friend along with you. Research recent sale prices in the area for properties similar to what you are looking for. You can access sales information usually by paying a fee or a number of agency websites list recent sale prices.
A final tip from Mr Bao is to ask lots of questions about things you are uncertain about when you look at properties. Purchasing a property is a big investment and you need to be confident you’re making the right decision. Keep an exercise book and make notes about each property you inspect. It’s easy to forget important details when you look at a number of properties over a period of time.
Strata Title Information
When you buy an apartment or unit it will most likely be under a Strata Title, which is according to the Real Estate Institute of Australia, “A scheme of property ownership where each proprietor owns parts of a building and has joint rights with other proprietors over the land and other common areas”.
Due to the complexity of these titles there are definitely questions you should be asking before purchasing. Matt from Australia’s Property Investing Forum says firstly there are the questions of the amount of the fees, who manages it, has there been any work done on the properties through strata, and to ask for a copy of the strata minutes for the last two years.
He recommends that you “thoroughly read the strata minutes, because this will tell you a lot about what has been happening with the property you are about to buy, and or the property next to it.”
Ask what the neighbours are like and about the other owners from the strata manager if you can. If they are really slack and never come to meetings, it can be hard to repair things if they need to be done, because you need a certain amount of votes. Read the strata bi-laws that the agent must give you, and try to understand them. This will teach you a lot about strata.
Depending on what state you are buying in there is no requirement for the agent to supply the last two years minutes so ask your solicitor to arrange for a search of the strata scheme records, and you will receive a report on things such as the financial status of the owners corporation, any pending additional levies, planned major works, any disputes etc. The searcher knows what to look for in the records. The minutes may not mention matters that happen throughout the year.
Most strata managers will not tell you more than the most basic details and will advise you to obtain a search. It is not reasonable to ring up and expect them to give you a run down on the building off the top of their head, nor are they being paid to do so.
Downsize in NSW now for Zero Stamp Duty
If you live in NSW, or are attracted to the idea, then this recent announcement should be of great interest to you. NSW retirees are being offered an incentive to downsize in a NSW budget plan aimed at boosting the new homes industry. For the next two years hhomeowners aged over 65 selling their home and buying a newly built dwelling worth up to $600,000 will pay no stamp duty. The savings can go up to $22,490.
The discount only applies to purchases of newly constructed houses and units, off-the-plan acquisitions, and house and land packages costing less than $600,000. For couples, at least one of the parties must be aged 65 or over to be eligible.
You must sell their primary place of residence to move into the newly constructed house or unit. “For people aged over 65, it won’t matter at what stage of construction the home is – they will pay no stamp duty,” NSW Treasurer Eric Roozendaal said.
NSW housing construction has been trailing Victoria for the past five years and Queensland for the past four years. So there is no clear indication yet whether this policy idea will spread to the rest of the country or simply remain NSW-based.
Charmaine Crow, from the Combined Pensioners & Superannuants Association of NSW said “We understand the rationale behind it, but if the government was serious about encouraging people to downsize they would apply it to all homes.”
Paul Versteege from the National Seniors Association said the $600,000 cut-off was “very reasonable” because it was close to the state’s median house price of $546,000.
Kath Brewster, a retiree in the process of selling her family home at Coffs Harbour, also welcomed it. She has lived in the home for 23 years but plans to downsize to a unit in the area.
“It’s a very emotional time for older people when they do decide to leave the family home, because of the networks, the community, the social capital they have there,” said Ms Brewster, who is also president of the NSW Council on the Ageing. “We welcome it for those people who are buying into new properties, but it really would have been better had it been available to all buyers over 65.”
Lifestyle Villages
Some people start down-sizing their accommodation well in advance of retirement, attracted by the idea of more freedom and less belongings, and private developers are therefore creating lifestyle villages that target these groups, generally people 45 years and over.
Lifestyle villages offer ‘resort style’ living in a community setting by providing a range of activities, facilities and social interaction. Some are managed with resident participation to ensure that the views and interests of residents are included. Residents of lifestyle villages are likely to include people who have retired but will also attract people still in the paid workforce.
National Lifestyle Villages CEO Mike Hollett says its award winning and popular concept is now spreading throughout Australia. “By far, one of the most appealing attractions we have at each of our Villages is its central hub – the Clubhouse… residents enjoy unlimited use of the fitness and wellness centre, gymnasium, indoor heated swimming pool, spa, full-size tennis-court, theatre, pool and billiards room, bowling-green, alfresco barbecue and entertaining area and much, much more, in a relaxed and friendly environment that overlooks the serenity of a lake and landscaped gardens,” he says.
The attractiveness of such a living arrangement is clear. However financial arrangements vary between villages. Arrangements may include a resident purchasing a home and entering into a lease agreement with the company, or the agreement may have each resident paying a weekly fee for the right to occupy the land and for use of the village facilities and services. Arrangements will vary between villages, so you need to read all the information provided to ensure you are getting what you want and that you fully understand the lease agreement. You should also know what impact there will be on your access to your State Government concessions, such as council and water rates.
Living with Family or Friends
This is the more traditional and still ever popular choice. However as times change and other options are more viable this can be considered less attractive by some retirees who hate the idea of “being a burden”.
Semi-retiree Maureen Warren, aged 66 of Victoria, said that while being close to her adult daughters was a priority, “being a burden or an influence on their marriages was a big concern”. So before deciding to live with family or friends, think through the options and possible consequences. Ms Warren’s decision was to sell her home and build a self-contained home on a property owned by one of her daughters. However it is important that you seek financial and legal advice before committing yourself to this sort of arrangement. In addition to needing approval to build the ‘granny flat’ from the local council, you should also consider:
- What if their living arrangements change? What are the implications for you?
- Will you be expected to provide babysitting for your grandchildren on demand?
- Will this affect your pension or your access to State Government concessions?
- Will you have enough privacy?
- Ownership of the property and land?
- How will your other children feel about you improving their sibling’s property?
- You may get on with your son or daughter and their partner now, but what if this changes?
Friends can provide us with support and companionship and be great fun. But would you be able to live with your friend? Before you make the final commitment to share a home with a friend, consider having a trial run. Sometimes a long week-end together can be enough to realise you don’t want to live with your friend.
How Selling Your Home Affects Your Pension
If you receive a pension from Centrelink or the Department of Veterans’ Affairs (DVA), there are special rules about how the money from the sale of your home will be treated. If you intend to buy another home, in most cases the money from the sale of your home will not counted as your asset for the next 12 months. If, despite reasonable efforts, you have not been able to purchase, build, rebuild, repair, or renovate a new principal home within 12 months, the principal home sale proceeds may be exempt from the assets test for up to 24 months. Regardless of the period of exemption, the proceeds of the sale will be subject to deeming provisions. Read about “How Deeming Works” on the Australian Government website www.fahcsia.gov.au or for more information contact Centrelink on 13 2300 or the DVA on 13 3254. There may also be tax implications.
To find out more, talk to the Australian Taxation Office.
Motor Homes
If it’s real freedom you are after – you can’t beat a home on wheels. And in Australia – boy do we have one of the best, and safest, countries in the world to explore by road! The RV revolution means there are literally hundreds of communities of motor home and caravan travellers who stay in contact with each other and meet up all over the country.
Gavin and Tracey Murray spend their time living, working and travelling Australia in a large converted Bedford bus motorhome. Tracey says, “We enjoy the lifestyle, the freedom, the adventure, and of course the challenges that it brings.”
So how do they decide where to go, and when? This is simple Gavin says, “We generally follow the weather… So north in winter and south in summer is the general pattern. We enjoy diving and fishing – so the coast is always high on the agenda.”
Of course what we all want to know is how much does it cost to live, and how strictly do you have to budget? Gavin said that this was a difficult question to answer, “we do live by a budget and we have tracked almost every dollar spent since moving into the bus. The first year, we were extremely careful; we spent a little over $20,000. But … it had not been as much fun as it could have been. At that point we decide to loosen the purse strings a little and not be too afraid to “do stuff”. The current feeling is… we might as well see and enjoy what there is to see while we are there … we may not ever get back there!”
Gavin and Tracey have a current spend rate of about $32,000pa. In reality, they say, they could cut this down quite considerably and with extreme care, could live on less than $20,000. Many people ask about the impact of fuel prices – in reality, fuel is not one of our major expenses. Food is the number one cost.
What about the cost of buying the motorhome itself? When buying a motorhome have a good look around – there is the odd bargain to be had – but in general, you get what you pay for. You can buy buses, caravans, pop-top vans, camper trailers and more. There are a multitude of options so research on the internet and take a look around an expo coming to your nearest city. You should be looking for something as close as you can get to what you want. So write down what you need, size, water capacity, layout, battery capacity, solar, generator, and continually critique it.
Private Property
Another option again is to buy a caravan or motorhome and leave it permanently in one place. This can be a very inexpensive option. It is important to remember that it will still need maintenance and repairs, and access to friends, family, shops and medical services are still very important.
Mike Williams and his wife purchased a used mobile home almost 19 years ago for just $8,000 and put on it on their own 3acre property. Their plans were to live on it while we built a new home. Then life got in the way and forward 15 years, and they are still in the mobile home, and about to buy another property nearby and have a small house built.
During this time, Mike says “the living has been cheap as we paid cash for the mobile home, that’s been very helpful in lean times and allowed us to save money to build a new home. The 3acres we lived on appreciated greatly and so we decided to purchase larger acreage for the new home. The mobile home is not worth anything at this point and will cost us about $2000 to dispose of”.
Caravan Parks
Caravans in a park with a good location, community and amenities can contrastingly hold and rise in value. A number of caravan parks provide long-term bays across Australia. According to cost comparison research from the Caravan, RV & Accommodation Industry of Australia (CRVA) staying at a traditional caravan park costs a couple approximately $50 a day (excluding spending money and food). Before embarking though consider the park itself. Things you need to consider include:
- Do you buy the caravan or just rent it?
- If renting, how often you can expect a rent increase?
- The security of tenure
- What will your rent cover?
- Ongoing expenses for use of amenities
- How liberal are the rules for residents and visitors?
- Do tenants like it there?
- Is there onsite management?
- What is the ground maintenance arrangement?
- Can one landscape in any way?
- Pets?
- Do you want a children’s playground for the grandchildren?
- How many cars are you allowed? If you have visitors, where do they park? What about an RV, is there parking for that?
- Garbage pickup? How many bags?
- Get a copy of the park rules before you decide
I’ve Made the Move! Any Last Tips?
Check your insurance. If you have purchased the house, you should ask your solicitor when you should start to insure it. This is usually when the sale becomes unconditional. You should also notify your contents insurer of your new address. If you have had any breakages or losses during the move and you had the appropriate insurance, make an insurance claim as soon as possible.
Update your will. When your circumstances change you may need to update your will. For example, if you move to another state or territory your decisions over inheritance can be affected. If necessary, make an appointment with a solicitor to update your will. At the same time, check that any enduring power of attorney is still valid, especially if you have moved interstate.
Go and meet the neighbours. Even if you do not want to be too friendly with your neighbours, it is a good idea to make an effort to meet them. If you do, you will know who lives around you and you will recognise anyone who does not belong near your place. As an introduction, you could ask on what days the garbage is collected.
Relax and enjoy!
Mentioned at the start of this article is The Department of Consumer and Employment Protection’s publication The Homebuyer’s Survival Guide. While it is WA focused, it has some great tips for all Australians. The guide contains a wealth of information and tips on building or buying a home, as well as advice about housing options for people over the age of 55. Call 1300 304 054 for a free copy or go to www.docep.wa.gov.au.
Disclaimer
The content of this is provided as a general overview for information purposes only and is not legal advice. While reasonable care has been taken in its preparation we do not guarantee or warrant the accuracy, reliability, completeness or currency of the information. Users of this should seek legal advice as to its applicability to their own circumstances and are responsible for independently assessing the relevance, currency and accuracy of the contents and the legality of their actions. Information in this is considered to be true and correct at the time of publication, however, changes in circumstances after the time of publication may impact on the accuracy of this information and no assurances are given as to its accuracy.