Following 18 months of research and product development Aveo has launched ‘The Aveo Way’, a much simplified financial model that prospective residents will more easily understand.
Aveo’s objective: eliminate uncertainty and perceived risk in joining a retirement village.
'The Aveo Way’ is their new corporate ethos of transparency and fairness. They see it as a role model for the village sector and possible lead for future legislation.
The major points are:
• 3 year 35% DMF – Year One: 7%, Year Two: 14%, Year Three 14%
• No capital gain or loss
• No sales commissions or marketing costs
• No refurbishment costs
• Guaranteed sale in six months (NSW & TAS) or 12 months (QLD, VIC, SA)
• Aveo ‘membership’ fee: $1,500pa + 2.5% increase p.a. paid on departure
• Monthly fees subsidy: $500pa paid by Aveo to assist with fees
• 21 day cooling off period without penalties or admin fees
• 90 day settling in period: legal fees and monthly village fees only
Alison Quinn, Executive Genral Manager, says their field trials over six months have generated strong support for the new model. People like the concept of a clean end to their time in the village.
When the resident leaves Aveo they simply hand back the keys knowing that the home will be ‘sold’ and they don’t have to contribute any costs to the process.
Walking away from sharing the capital gains works for both Aveo and the residents, Aveo claims. Alison points out that the cost of a full refurbishment of a unit is approximately $50,000. The 50% capital gain on the $350,000 unit over 10 years is likely to be around $50,000 as well. But Aveo takes the risk.
The lower DMF in Year One supports concerns by a prospective resident that they may not know if they like village life but by Year Two they will be happily committed. The average tenancy across Aveo villages, including serviced apartments, is 8.6 years.
The accelerated DMF over three years is a path well travelled by a number of not-for-profit village operators (many have 5 years).
Aveo has expectations that the clarity of this financial model will be embraced over time by the sector and will in time largely reduce the negative perceptions of village contracts.
The Aveo 'membership' is designed to provide a collegiate relationship with new residents plus build a base for expanded member services, such as bulk rates on insurance.
The Aveo Way program is being offered across 44 Aveo villages plus 10 RVG villages. Aveo owns or manages 75 villages.
