More about retirement home models....

For the purpose of this blog all old age or retirement homes shall be referred to as retirement homes.

These are for three basic types. In this classification one is talking of private retirement homes and not those that are managed by the government.

The three types are:

1. Outright purchase. 
2. Deposit model.
3. Monthly charge model 

The outright purchase model  is the one which was originally conceived by Paranjape Builders of Pune. Here the unit can be purchased by anyone, but to occupy the same one has to be 55+ to occupy the same. The advantage is that one owns the property and the same appreciates with time. The monthly maintenance is usually taken up front as a non-refundable interest free deposit. Being an owner one is free to do what one wants without any rules and regulations, other than the usual ones for an Association. The management is usually with an elected body of owners. The builder may provide infrastructural support. Unfortunately these schemes are falling by the wayside, with units remaining empty or being occupied by tenants.

The disadvantage is a high capital cost and the capital is locked in. This may not be a suitable scenario for a senior citizen. The Reverse Mortgage Scheme is possible, but the returns are not commiserate with the cost and risk.

The deposit model has a lower "capital cost" since the deposit is lower than the outright purchase cost. However there are rules for "lock-in" of the refund and in many cases there is a "non-refundable deposit" . This is a way to ensure that the turnover is low since people are scared of losing the non-refundable part. Why this is a myth I will deal with later. Basically they offer good service and since they have a deposit they can raise the charges as and when they want without any compunction since very few will challenge them. They sign contracts which they violate without any shame or fear. This is because these contract do not fall under the Consumer Act as they seldom have a deficiency of service. One can challenge them legally, but the legal process will take years. These projects rely on the fact that the average age is 70+ and then people do not want the hassles. However one hopes that this blog will help to highlight these issues and bring them into the public eye.

The last model is the monthly subscription model.  This seems to be the fairest model since there is no substantial deposit or capital investment. However there is a hidden factor. Since there is no contract or legal binding, the management of these units can exercise a dictatorial regime regarding the costs and facilities.

I have proof for all the statements made above  and  can make them available to anyone who is interested.

Until later, wish all my followers a Happy Diwali and a Profitable New Year.

DON