Retirement Village Types

Retirement Village Types: Finding the Right Option for You

When you start exploring retirement village living in Australia, you’ll quickly discover there isn’t just one type of contract or ownership structure. Each village can operate under different legal models, which can have a huge impact on your costs, rights, and obligations — both while you live there and when you leave.

This guide explains the most common retirement village types, how they work, and what you need to think about before you choose the best fit for your lifestyle, finances, and peace of mind.

Why Understanding Village Types Matters

Unlike buying a regular house, living in a retirement village usually doesn’t mean you get freehold title. Many contracts give you the right to occupy, not full ownership. Each structure can affect:

• How much you pay upfront, ongoing, and on exit
• Your rights to sell or transfer the unit
• Who pays for maintenance, capital upgrades, and repairs
• How village management operates and interacts with residents
• How the value of your unit grows (or doesn’t) over time

Getting good advice before signing anything is essential. The examples here will help you ask the right questions.

Leasehold Retirement Villages

Leasehold is one of the most common legal models for retirement villages in Australia. Instead of buying the unit outright, you pay an upfront fee for a long-term lease, often 99 years or until you leave.

How It Works

You sign a lease agreement with the village operator, which gives you the legal right to occupy the unit and use shared facilities. You usually pay:

• Ingoing contribution: A large upfront payment, similar to the cost of a small home in the local area.
• Ongoing fees: Weekly or monthly fees to cover village operating costs.
• Exit fee: Also known as a Deferred Management Fee (DMF) — a percentage of your entry cost or resale price, paid when you leave.

Pros of Leasehold Villages

• Clear legal right to live in the unit for life, or as long as you can live independently.
• Often more affordable upfront than buying freehold.
• Villages usually maintain the buildings and gardens.

Cons of Leasehold Villages

• You don’t own the unit — so no property title to pass on to family.
• Exit fees can be substantial (20–35% is typical).
• You may share capital gains with the operator — or none at all.

Example

Mary signs a 99-year lease and pays $400,000 to move in. After 10 years, she decides to move to aged care. The village contract says there’s a 30% DMF, so $120,000 comes off her refund, plus reinstatement and selling costs. Her family gets back what’s left of the original ingoing contribution.

Licence to Occupy

This is the most common arrangement for private villages. It’s similar to leasehold but technically, you don’t have a lease or a title — you pay for the right to live in the unit under a “licence.”

How It Works

You sign a licence agreement and pay an ingoing contribution. You then have the right to occupy the unit and use the village’s facilities for as long as you can live there independently.

Like leasehold, you usually pay ongoing fees and an exit fee (DMF) when you leave.

Pros of Licence to Occupy

• Simpler paperwork than strata or company title.
• Generally a lower upfront cost than buying a unit outright.
• Village operator takes responsibility for maintenance and management.

Cons of Licence to Occupy

• You don’t own the property — you can’t borrow against it or pass it on in a will.
• Exit fees can be complex and vary greatly.
• If the operator goes bankrupt, your occupancy right could be at risk (though resident protections exist).

Strata Title Retirement Villages

Some villages are set up under strata title, just like a regular apartment block. You buy your unit on the property title, and become a member of the owners corporation (body corporate).

How It Works

You pay a purchase price and get the title registered in your name. You pay strata levies to cover shared costs like gardens, lifts, or community centres. You can sell or lease your unit if you wish — but village rules and state laws may give the operator rights to approve buyers.

Pros of Strata Title Villages

• You own the unit outright — you can sell or bequeath it as you choose.
• You may benefit more directly from property value increases.
• Familiar structure for people used to strata apartments.

Cons of Strata Title Villages

• You’re responsible for maintenance inside your unit.
• You still pay village fees — and possibly exit fees depending on the village contract.
• Resale can be slower — buyers must meet age and suitability criteria.

Community Title Villages

Community title is similar to strata but covers larger, more varied developments — like a mix of houses, units, and shared spaces.

Ownership is freehold for your dwelling, plus shared rights over communal areas like gardens, roads, or clubhouses.

These villages often have their own community association that sets by-laws, collects levies, and manages shared facilities.

Pros and Cons

• Pros: Freehold ownership; clearer resale rights; potential capital gains.
• Cons: More responsibility for maintenance; ongoing community levies; some still have exit fees.

Company Title Villages

Company title is an older structure, but still used by some villages, especially long-established ones. You buy shares in a company that owns the whole village — your shareholding gives you the right to occupy a unit.

Buying or selling involves the company board’s approval of new residents.

Pros and Cons

• Pros: Greater resident control if the company is resident-run; possible capital gain share.
• Cons: Banks can be reluctant to lend; complicated resale; exit fees often still apply.

Rental Retirement Villages

Some villages offer a rental option instead of buying in. This model can suit people who don’t want to tie up capital, or who prefer maximum flexibility.

You pay a weekly rent and may be able to access Commonwealth Rent Assistance. Services like meals and cleaning may be included for an extra fee.

Pros of Rental Villages

• No large upfront payment; preserve your savings.
• Flexibility to move out with less financial impact.
• Can suit people who don’t own property or want to free up cash.

Cons of Rental Villages

• Rent can increase over time.
• No return of capital when you leave.
• Some may not allow pets or modifications.

Serviced Apartments vs Independent Living Units

Some villages offer serviced apartments — units where meals, cleaning, and laundry are included. This suits residents who want to stay independent but need a bit more help day to day.

These may operate under any of the legal models above, but usually attract higher ongoing fees.

Key Questions to Ask

Whichever type you’re considering, always ask:

• Do I own the unit or just have the right to occupy?
• What are the upfront, ongoing, and exit costs?
• Who pays for maintenance inside my unit and for shared facilities?
• What happens if I want to leave early?
• Will I share capital gains or losses with the operator?

Final Tips: Get Expert Advice

It’s essential to read the disclosure statement carefully and get independent legal advice from a solicitor who understands retirement village law in your state or territory. A financial adviser can also help you understand how the contract might affect your Age Pension and overall retirement plan.

With the right information and advice, you can choose the village type that best matches your lifestyle and financial goals — and enjoy your retirement years with confidence and peace of mind.