Retirement Village Fees

Understanding Retirement Village Fees

Retirement villages can offer a great lifestyle for older Australians looking to downsize, stay socially connected, and live with more security and less home maintenance. But the financial side can be complicated — and it’s vital to understand all the fees before you sign anything.

This guide explains the main types of fees you’ll come across when moving to a retirement village in Australia. It breaks down how they work, how much you might pay, and what to look for in your contract. With good advice and careful planning, you can choose a village that fits your lifestyle and your budget.

Three Main Fee Types

Most retirement village contracts include three broad fee categories:

• Entry or ingoing contribution
• Ongoing service or maintenance fees
• Exit fees (also called deferred management fees)

Each village can set these up differently, so always check the disclosure statement and get legal advice before you sign.

Entry or Ingoing Contribution

This is the upfront amount you pay to secure the right to live in the unit. Depending on the contract, you might:

• Buy a unit outright under strata or community title
• Pay a large lump sum for a leasehold or licence to occupy
• Pay a bond or deposit for a rental village

In many cases, the ingoing contribution is similar to the cost of a small house or unit in the local market — for example, $ 300,000 – $ 800,000 is common, depending on location and unit size.

How it works

With leasehold and licence to occupy villages, the operator holds your payment until you leave. You or your estate may get back a refund, but usually less an exit fee and other deductions.

Key things to check

• Is the upfront payment refundable, and how is the amount calculated?
• Will you share in capital gains or losses?
• How long will it take to receive your refund after you leave?

Ongoing Fees

Residents pay regular fees to cover the day-to-day running costs of the village. These are often called “general service charges”, “maintenance charges” or “recurrent charges”.

These fees can include:

• Upkeep of gardens, buildings, and common areas
• Council rates and water
• Insurance for village buildings
• Staff wages (managers, gardeners, cleaners)
• Shared utilities for common areas
• Security and emergency systems
• Recreation facilities maintenance

How much are ongoing fees?

They vary by village size, location, and facilities. It’s common to pay anywhere from $80–$200+ per week. In some high-end villages, ongoing fees may be more than $1,000 per month.

Can fees go up?

Yes. Operators can usually increase ongoing fees annually, often linked to the Consumer Price Index (CPI) or approved village budgets. Some states require residents to vote on significant increases. Always ask how fee rises are determined.

Exit Fees (Deferred Management Fees)

Most Australian retirement villages charge a “deferred management fee” (DMF) when you leave. This is sometimes the biggest surprise for new residents and their families — so it’s crucial to understand it upfront.

How the DMF works

Typically, the DMF is a percentage of your ingoing payment (or resale value). It’s deducted before you get your refund when you leave or pass away.

Example: Your contract says the DMF is 3% per year, capped at 30%. If you paid $400,000 to move in and leave after 7 years, you pay 21% ($84,000) as an exit fee.

Why do villages charge an exit fee?

The DMF helps operators keep upfront costs lower for residents. The idea is you pay more at the end, rather than during your stay. It covers the cost of village management, ongoing capital upgrades, and reinvestment.

Check these details

• What percentage is charged each year, and what is the maximum?
• Is it calculated on your ingoing payment or resale value?
• Are there reinstatement or refurbishment costs?
• How long will it take for your refund to be paid out?

Other Fees and Costs You Might Pay

Besides the big three, be aware of these possible extras:

Capital Replacement or Sinking Fund

Some villages collect extra fees for major repairs or replacements (like roofs, lifts, or big refurbishments). In strata or community title villages, this is similar to strata levies.

Personal Services Fees

If you choose extra services — like meals, cleaning, or laundry — you’ll usually pay separate fees for these.

Selling Costs

You may pay for reinstatement of your unit to a saleable condition. Some operators charge marketing or selling fees too.

Utilities and Insurance

Residents usually pay for contents insurance for their unit, personal electricity, phone and internet. Buildings insurance is usually included in the village’s general fees.

Legal and Advice Costs

Before you sign, factor in the cost of getting proper legal and financial advice — a small investment for peace of mind!

Fees by Village Type

Leasehold and Licence to Occupy

Most common — expect ingoing contribution + ongoing fees + DMF exit fee. Operator usually controls resale.

Strata or Community Title

You own the unit outright, so you may pay strata or community levies instead of ongoing fees — but some strata villages also charge a DMF. You’re responsible for unit maintenance inside, so factor that in.

Company Title

Older structure. You buy shares in the company — ongoing and exit fees still apply.

Rental Villages

No ingoing contribution — you pay market rent, which may include some services. No exit fee, but you don’t get capital back.

Example Cost Breakdown

Here’s a realistic example for a leasehold village:

• Ingoing: $450,000 (entry contribution)
• Ongoing fees: $600/month = $7,200/year
• DMF: 3% per year, capped at 30%
• Resident leaves after 8 years

Exit fee = 24% of $450,000 = $108,000 Refund amount = $450,000 - $108,000 = $342,000 Plus reinstatement and selling costs, say $10,000

So the final refund is $332,000 to you or your estate.

How to Compare Village Fees

When comparing villages, don’t just look at the upfront price. Ask for a full fee summary and see what you get for your money.

Questions to ask:

• What is the full cost of living here for 5, 10, or 15 years?
• What services and facilities are covered by fees?
• What happens if I run out of money — are there hardship arrangements?
• Who pays for maintenance inside my unit?
• How long does it take to get my refund when I leave?

Understanding the Disclosure Statement

Every state and territory has rules about what information operators must give you before you sign a contract. You should receive:

• A disclosure statement with all fees and charges clearly listed
• A draft contract to review
• Details of your cooling-off period

Don’t rush — use this time to get independent legal and financial advice so you’re clear on every cost.

Tips to Avoid Costly Surprises

• Read the contract — and the fine print — before signing.
• Ask for worked examples showing what you’d pay when you leave.
• Compare at least three villages — fees vary widely.
• Think about how long you might stay. DMFs often max out at 5–10 years.
• Understand who is responsible for repairs and upgrades.

Final Thoughts on Retirement Village Fees

Retirement village living can be a great choice for many older Australians — but only if you fully understand the fees and how they work. From your upfront contribution to your ongoing payments and your final exit fee, every dollar counts.

Take your time, ask questions, and get expert advice. When you know what to expect, you can enjoy village life with fewer surprises and more confidence that you’ve made the right choice for your future.

At OmS, we’re here to help you navigate the financial side of retirement living so you can focus on what really matters — enjoying your next chapter with peace of mind.