Things you should look out for before moving into a retirement village

Downsizing your family home and moving into a retirement village can be one of the most stressful experiences of getting older.

From choosing a retirement village to reading through the contracts, which can be up to 80 pages long, it can be a very confusing time.

According to an article penned by Bina Brown, director of aged care placement company Third Age Matters, it can be even more confusing because retirement villages are regulated by each state and territory.


She writes there are two main things you should look out for – contracts and departure fees/costs.

Ad. Article continues below.



Brown writes that there are three main contract models used by retirement villages in Australia. 

  1. Outright ownership. This is where you have the title over the unit or house you live in.
  2. Loan licence model.  The loan licence model is where the bulk of the money you’re putting in set up as loan to the operator of the village, who gives you a licence to occupy the unit.
  3. Leasehold or sublease model. This model provides you with a long team lease, which is registered on the Certificate of Title for the land owned by the village.  

Each of these contract types has a few things in common. For example each one has an ingoing contribution (an asking price for the unit), some form of fee for exiting the village (a departure fee, based on how long you live in the unit) and recurrent charges that cover day to day operating costs of the village (these can include maintenance, rates, water and staffing costs). 

Ad. Article continues below.

Brown writes that it’s not uncommon for people, especially those who enter a village later in life, to be paying high maintenance fees for facilities they barely use because of their age or health. 

It’s important you know you rights and obligations under your village contracts, according to Jo Twible – a representative on the ACT Government’s Retirement Village Advisory Group.

She told the Sydney Morning Herald that entry to a retirement village was more complex than buying or selling your normal home


Read more: Questions you should ask before moving into a retirement village

Ad. Article continues below.


Departure Fees

One of the areas that can cause some people great confusion is the fees paid to the village when you choose to leave (either if you die, you need to relocate or you go into an aged care facility).

Brown writes that it’s common for the departure fee to be calculated as a “percentage paid per year of residency”, usually capped at between 30% and 38%.

“The cap is generally reached after 10 years but it can be reached after five years. Some villages charge indefinitely,” she writes.

Ad. Article continues below.

So, why is there a departure fee?

Well, the Retirement Living Council said the fee allows resident to part-pay for the cost of building the village, instead of paying a full fee when they enter the village.

Apparently, it also gives you the choice of whether you pay full market price when you move in or defer some of the payment for when you leave.



Ad. Article continues below.

Vice-president of the ACT Retirement Village Residents Association Pamela Graudenz told the Sydney Morning Herald said many people were moving into villages without understanding the contracts or costs involved.



“People are often moving in stressed and too easily signing documents,” she says.

“They have just sold their home and are attracted to the idea of the lifestyle or not having to worry about the repairs and maintenance of a house, but then they don’t understand the finer details of how retirement villages run and the potential costs when they are there.”

Ad. Article continues below.


Have you had to deal with retirement village contracts or departure fees before?