Lendlease, one of the country’s biggest retirement village operators, will now offer prospective residents a choice of four financial models at 15 of its 71 retirement villages.

Lendlease’s existing contract, whereby a person buys a property and then pays a Deferred Management Fee (DMF) at the end would still be offered but there will now be three other payment options to choose from.

These include a pre-paid plan, a refundable contribution and a pay-as-you-go model. Many of the not-for-profit operators also offer alternative payment options.

According to Tony Randello, managing director of retirement living at Lendlease, research suggests that Baby Boomers have different expectations to previous generations and the company had spent a lot of time talking to prospective residents about their reasons for choosing not to buy into a village and using that feedback to develop three additional contract options to the DMF.

Pre-paid plan: The resident pays the management fee up front and retains the full capital gain or loss on the property. The exit fees would be about 1-2% in sales commission and $10,000-$15,000 in refurbishment costs.

Refundable contribution: The resident pays a higher price up front and receives it back in full when they leave - with no exit fees. There is also a 3% establishment fee payable upfront, which is not refundable. Whilst the resident will not benefit from capital gains and inflation they have full certainty and make it easier to transition to aged care if needed.

Pay-as-you-go: This is similar to renting and would benefit retirees who wanted to lease the family home to tenants then fund their own accommodation cost at the village out of the rental income from the home. Retirees who sold the family home and invested the proceeds or contributed it to super and then lived off that income may find this model appealing.

Depending on market feedback, Lendlease has plans to extend these payment options across their other villages.