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Hidden Costs of Retirement Villages: What You Need to Know

Considering a retirement village can be an exciting step towards a comfortable and community-oriented lifestyle.

As with many big decisions, it’s crucial to be well-informed about all aspects, especially the costs. While retirement villages promise ease and convenience, there are costs you need to be aware of.

In this guide, we’ll shine a light on those less obvious expenses, breaking them down in simple terms so you can make an informed choice without any surprises down the line.

Retirement Planning & Costs of Retirement

Entry and Exit Fees

Moving into a retirement village often involves paying certain fees upfront and possibly when you leave. Here’s a simplified breakdown of the often unknown fees involved:

Entry Fees:

Entry fees in retirement villages, often termed as ingoing fees, are pivotal upfront payments that secure a resident’s place within the community. The amount and structure of this fee are primarily influenced by the type of ‘title’ or ‘tenure’ a resident chooses, be it Freehold, Leasehold, Company Title, or other arrangements.

Moreover, entry fees can also vary based on the specific village amenities, further emphasising the need for prospective residents to comprehensively assess these costs in light of their desired amenities and housing arrangements.

Entry Fees:

When leaving a retirement village, residents are typically subject to an “Exit Fee,” often known as the Deferred Management Fee (DMF) or Departure Fee. This fee:

  • Is deducted from the ‘Entry Payment’ or ‘Ingoing Contribution’ you initially paid, which corresponds to the property’s market value.

Serves multiple purposes:

  • Helps keep ongoing maintenance fees (recurring fortnightly charges) affordable for residents.

  • Funds significant improvements and potential expansions within the village.

  • Offers residents more financial flexibility during their initial move-in, with choices to pay a higher entry fee for a lower exit fee or vice versa.

Potential and current residents must consult with financial planners to thoroughly understand these fees and their implications.

Understanding entry and exit fees is important as they can significantly affect your financial planning for retirement. Being aware of these costs can help you better prepare for the financial side of retirement living, ensuring no surprises down the road.

Stamp Duty

Stamp duty, commonly called land transfer duty, is a state-imposed tax levied upon purchasing properties, including some retirement village units. Its applicability primarily depends on the unit’s ownership structure:

Strata, Community, or Company Titles:

Units with these titles typically attract stamp duty as the government perceives them as freehold property. Despite this, it's worth noting that a minority (approximately 10 to 12%) of retirement village units in Australia are under such titles.

Leasehold and Licence Titles:

Units within this framework generally do not attract stamp duty. This is because, under these arrangements, the resident is leasing the space rather than making a freehold purchase.

The exact amount and rules governing stamp duty can vary across states, so it’s paramount to investigate specific regional regulations when considering a unit. Some regions even offer seniors stamp duty discounts, potentially easing this financial aspect of the purchase.

Prospective buyers should know these costs and consult with financial or legal professionals to understand their commitments when moving into a retirement village.

Maintenance Service Fees

Residents in retirement villages must pay weekly, fortnightly, or monthly maintenance charges, covering costs for:

  • Village management, including staff salaries.

  • Maintenance of facilities and common areas like gardens and recreational areas.

  • Additional services, such as emergency call system monitoring.

  • Some villages allocate part of this charge for capital improvements or set a distinct fee.

For strata title holders, there’s an additional owners’ corporation fee covering common property upkeep and insurance. In some cases, both fees are combined into one payment. Moreover, assisted living arrangements have higher recurrent charges due to added services like meals.

Regarding increments, the initial maintenance charges can only rise with the CPI. Any significant increase needs approval from either the residents’ committee or a majority of the residents and can also be influenced by factors from the Retirement Villages Act 1986, specifically section 38, like wage increases or tax hikes related to the village land.

Refurbishment Fees

Retirement village refurbishment fees are typically included in the exit fees when residents leave. Operators impose this fee to repair and repaint a property before its resale. The fee varies based on the village, contract terms, unit condition, and refurbishment extent. It can be a fixed amount or a percentage of refurbishment costs. Some villages might allow residents to do their own refurbishments to reduce this fee. Potential refurbishment aspects include:
  • Repairing damages
  • Repainting
  • Renovations

The contract often details the refurbishment fee, ranging from a few thousand to tens of thousands of dollars. Always review contract terms carefully before joining a retirement village.

Additional Hidden Costs

In addition to the costs already mentioned, there are several other potential hidden costs associated with retirement villages:

Special Levy:

This additional charge may be imposed for unexpected expenses or special projects.

Personal Services Fees:

Some villages may charge extra for additional services such as meal delivery, personal care, or nursing services.

Water Rates, Building Insurance, and Building Maintenance:

You may be responsible for ongoing costs.

24-Hour Emergency Call System:

Some villages have a 24-hour emergency call system for residents, which may come at an additional cost.

Access to and Upkeep of Communal Village Facilities:

If the village has communal facilities like a pool, gym, or clubhouse, there may be additional fees for their upkeep.

Insurance fees:

Residents of retirement communities may be required to pay for building and contents insurance for their units.

Parking or Garage Fees:

Some retirement villages may charge additional fees for parking spaces or garages. This could be a one-time fee or a recurring monthly fee.

Furniture Costs:

If the unit in the retirement village is not furnished, you may need to budget for the furniture cost. Some retirement villages may offer furniture packages at an additional cost.

It’s important to note that not all retirement villages will have these costs, and the amounts can vary greatly. Therefore, it’s crucial to ask about all potential fees and charges when considering moving into a retirement village.

Capital Gains Fees in Retirement Villages

The matter of capital gains is largely governed by the specifics of your contract. Some contracts allocate all capital gains to the retirement village owner, which could lead to you exiting the village with less money, especially after a departure fee deduction. However, other contract features, such as lower recurrent charges, could offset this loss. Additionally, certain villages may levy a capital gains fee upon the sale of a home, with the fee rate ranging between 37.5% to 50% of the capital gain, as determined by the operator.

For instance:
Purchase PriceSale PriceCapital GainFee to Village Operator
$450,000$600,000$150,000$75,000 (at 50%)
$500,000$650,000$150,000Up to $56,250 (at 37.5%)

On leaving the village, you retain any capital gains your unit has acquired. For a unit bought at $500,000 and sold at $650,000, the capital gain is $150,000. Even though up to 37.5% of this gain might be shared with the operator as a departure fee, you keep the remainder. This does not factor in Capital Gains Taxes imposed under Australian Taxation Regulations.

Ownership Limitations in Retirement Villages

The ‘loan and lease model’ is popular in retirement villages, particularly in places like Australia. It’s essential to understand this model’s nuances as it can greatly impact your finances and future decisions.

What is the 'Loan and Lease Model'?

Instead of owning your home outright in the retirement village, you lend the village money, called an ‘interest-free loan.’ In return, you get a spot in the village, often under specific lease terms.

Key Documents:

When you opt for this model, you’ll typically be required to sign:

1. Contract:

Outlines the agreement between you and the retirement village.

3. Loan Agreement:

The terms of the interest-free loan you provide to the village.

Important Financial Implications:

This model’s financial implications are crucial to consider:

Equity BuildingIt’s challenging to increase the property value.
Deferred Management FeeA fee the village keeps when you leave. It’s often a percentage of the original entry payment or the sale price.
Ongoing Maintenance FeesRegular costs for the upkeep of your unit and the village’s facilities.
Reselling or InheritanceThe contract might have specific terms that can make selling your place or passing it to heirs complex.

The ‘loan and lease model’ in retirement living can benefit many, but it’s essential to be aware of potential costs and limitations. Before making any decisions, go through the retirement village contract thoroughly. Given the complexity, consider seeking legal advice to ensure you’re making an informed choice.

Questions to Ask

When touring potential retirement villages, asking the right questions is important. Here are some key ones to consider:

  1. What are the entry and exit fees, and how are they calculated?
  2. Are there any ongoing fees, and what do they cover
  3. What happens if I want to sell my property or pass it on to my heirs?
  4. What services and amenities are included?
  5. Is the village pet-friendly?
  6. What is the policy on visitors and car parking?

Remember, it’s your retirement, and you deserve to enjoy it in a place that suits your lifestyle and financial needs. So, take the time to do your research and make an informed decision.

Things to Be Cautious About

Indeed, it’s crucial to be vigilant for red flags when considering a move to a retirement village. Here are some key ones to watch out for:

Lack of Transparency About Fees:

If the retirement village is not upfront about all the fees involved, including entry and exit fees, ongoing service fees, and any potential hidden costs, this is a major red flag.

Lack of Services or Amenities:

The retirement village should offer various services and amenities to enhance your lifestyle. If these are lacking, the village needs to be well-managed or prioritise the well-being of its residents.

Always ensure you fully understand the contract before signing and consider seeking legal advice if needed.

Over 55s Lifestyle Resorts

Lifestyle Resorts or Lifestyle Communities designed for those over 55 years provide a clear and distinct pricing model compared to typical retirement villages. The main attraction here is the ownership structure: you buy your home but lease the land it’s built on, usually for an extended period like 90 years. This arrangement is popularly known as the land lease community.

Key Highlights of Over 55s Lifestyle Resorts:

Home Ownership:

It's your home. Feel free to design and decorate it as you see fit.

Leasehold Arrangement:

While you own the home, the land it stands on is on lease, typically for about 90 years.

Transparent Costs:

No hidden surprises. No exit fees exist, so if you decide to move on, any profit from the sale is yours.

Financial Support:

Pensioners might qualify for Government Rental Assistance. This aid can significantly offset site fees.


Enjoy the feel of a resort with facilities like swimming pools, sporting areas, and dedicated spaces for social interactions.

Making the decision to move into a lifestyle resort offers not just a home but a thriving community to enjoy retirement. Nonetheless, before any decision, ensure you’ve thoroughly understood all contract terms, and if in doubt, consulting a legal expert can be a wise choice.

Over 55s Lifestyle Resorts

Over 55s lifestyle resorts offer a unique blend of financial perks and lifestyle benefits that make them an attractive alternative to traditional retirement villages. Here’s a comprehensive look at these advantages:

Financial Perks

Home Ownership:

In a lifestyle resort, you own your home, allowing you to design and decorate it as per your taste.

Leasehold Arrangement:

While you own the home, the land it stands on is leased, typically for a long duration, like 90 years. This often results in lower purchase prices compared to traditional property markets.

No Stamp Duty:

Purchasing a home in an over-lifestyle resort does not attract stamp duty, which can lead to significant savings.

No Capital Gains Fees:

If you decide to sell your home, all the profits (capital gains) are yours, with no fees imposed by the resort.

Transparent Costs:

Costs related to living in an over 55s lifestyle resort are typically clear and upfront, eliminating hidden charges or surprise costs.

No Exit Fees:

If you decide to move on, there are no exit fees, and any profit from the sale is yours.

Government Rental Assistance:

Pensioners might qualify for Government Rental Assistance, which can significantly offset site fees.

Lifestyle Benefits


Lifestyle resorts offer many facilities, such as swimming pools, sporting areas, and dedicated spaces for social interactions. Some even feature clubhouses, restaurants, and health and wellness centres.

Community Living:

These resorts provide a vibrant community atmosphere where you can engage with like-minded individuals and participate in various social activities.

Over 55 lifestyle resorts combine the benefits of home ownership with a vibrant community lifestyle while offering significant financial advantages. They are an excellent choice for those seeking a comfortable and engaging retirement lifestyle.

Experience Luxury Living at The Links Over 55s Resort

At The Links South West Rock, we invite you to discover Australia’s finest facilities at your doorstep. Nestled in a unique blend of comfort and luxury, every amenity has been crafted with our residents in mind.

Year-round Swimming:

Dive into the comfort of our heated pool and spa. At The Links, residents enjoy the luxury of swimming all year round, be it under the summer sun or winter's gentle chill.

Games & Sports:

Challenge friends or make new ones with our array of sports facilities. From the elegance of a croquet match to the excitement of pickleball to the classic charm of our professional-sized bowling green, there's always a game waiting for you.

Stay Fit & Active:

Fitness is integral to life at The Links. With a fully-equipped gym and various recreational activities, every day brings a new adventure. And for our golf enthusiasts, our 450m practice putting and chipping greens await, ready to help you refine your swing.

Recreation & Leisure:

Our communal spaces are both inviting and serene. Spend evenings at our barbecue areas or store your recreational vehicle securely, gearing up for your next journey.

At The Links, we aren’t just providing a space to live; we’re setting a gold standard.

Our dedication to offering an unparalleled living experience has placed us among Australia’s best retirement villages.

With our luxurious facilities, diverse recreational activities, and a buzzing community atmosphere, we stand as the go-to destination for those over 55 and anyone looking to redefine their retirement in comfort and style.

Frequently Asked Questions

While they offer several perks, retirement villages come with challenges. This includes notable entrance and departure costs, potentially intricate fee arrangements, and constraints on owning property. Moreover, certain individuals might not appreciate the village regulations, feeling a lack of variety or sensing an exclusive social scene.

The value of joining a retirement village largely hinges on one’s personal context and inclinations. They present numerous advantages like a sense of community, safety, and handy facilities. Nonetheless, they might come with substantial expenses, including entrance and exit charges, regular service fees, and other unexpected costs. Thoroughly weighing these expenses against one’s financial health and living preferences is pivotal before deciding.

The primary distinction is the type of agreement over the property. In retirement villages, the arrangement usually concerns the building itself, so you’re paying a fee to reside there without owning your space. On the other hand, in over 55 lifestyle villages, the contract is about the land, granting you ownership of your house while you lease the underlying land for an extended duration. This setup often offers more financial predictability and adaptability.

This decision is contingent upon individual preferences and needs. Living in a retirement village provides community, security, and easy access to amenities and services. Staying at home offers familiarity, potentially lower costs, and perhaps more independence. Assess your desires, financial situation, and long-term objectives to make an informed choice.

The Links primarily operates under the land lease retirement village model, allowing residents to own their homes while leasing the land for a long duration. This transparent structure eradicates any exit fees, meaning residents can enjoy any profits from a sale without deductions.

The Links stands out because it emphasises community, lifestyle, and superior facilities. Residents can indulge in diverse recreational activities, from its year-round heated pool to a professional-sized bowling green and fully-equipped gym. Moreover, the vibrant community ambience and state-of-the-art amenities like the 450m practice putting and chipping greens make The Links the epitome of lavish retirement living.

A Deferred Management Fee (DMF) is a charge incurred by residents upon exiting a retirement village, often deducted from the sale price of their unit or their initial contribution to the village. This fee, which might also be termed an exit or departure fee, is generally a percentage of the initial contribution or the sale price and can vary based on factors like the length of residency and accessed services. The DMF’s structure and percentage are stipulated in the contract, and it aims to cover the village’s management and operational costs, ensuring the community’s maintenance and sustainability throughout the residents’ stay.