Retirement Village ORAs: The Real Risk Often Appears at Exit

One of the biggest issues I see with occupation right agreements (ORAs) arises at exit, not entry — specifically, when repayment of the exit amount is made.

In most ORAs, repayment does not occur when a resident leaves the village. Instead, it is usually delayed until a new resident has paid their entry fee for that unit. In a strong market, that delay can be relatively short. In the current market, with more units coming onto the market and slower turnover, repayment timeframes have increased significantly for some providers.

For some people, this delay may be manageable. For others, it can create real financial pressure — particularly where the exit funds are needed to pay for aged residential care, alternative accommodation, or ongoing living costs following an unexpected move.

Why this is driving proposed law changes

These repayment delays sit at the heart of the proposed reforms to the Retirement Villages Act. Key improvements being proposed include:

• a process for former residents to apply for early access to funds in situations of specific need

• interest being paid after six months if a unit remains unlicensed

• repayment of exit funds no later than 12 months after a unit is vacated

• weekly fees and deductions stopping immediately when a resident vacates

While these changes are not yet law and are likely to apply only to new ORAs, they reflect increasing recognition that delayed repayment can cause hardship at a vulnerable stage of life.

What people should be thinking about before signing

The Commission for Financial Capability consistently encourages people to look beyond the entry price and understand how exit works in practice. In addition to repayment timing, two considerations are especially important:

• Resaleability of the unit
  Consider how easy your unit is likely to be to re-license. Factors such as layout, location within the village, stairs, parking, sunlight, and proximity to facilities can all affect how quickly a unit attracts a new resident — which in turn affects how quickly you are repaid.

• Continuum of care
  Consider whether the village offers a continuum of care on site, and if not, whether the alternatives available elsewhere would realistically meet your needs. Moves prompted by health changes are often unplanned, and delayed repayment can be particularly challenging in those circumstances.

Final thought

ORAs are not inherently problematic, but they are very different from owning property, and the biggest financial risks often appear at exit rather than entry. Understanding how repayment works — and how long it could take in a slower market — is a critical part of making an informed decision before you sign.