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5 considerations before moving into a retirement village

Date: Nov 27th, 2017

It’s important you understand how retirement villages work and the type of costs you’re likely to come across.

Today, around 184,000 Australians call a retirement village home. And, with the country’s senior population only set to increase, the number of people wanting to live in a retirement village is predicted to more than double by 20251.

If it’s something you or a family member have been thinking about, a national survey revealed 93% of retirement village residents felt their overall happiness and life satisfaction remained the same, or had increased slightly to significantly since making the move from the family home2.

If you’d like to know more, we’ve pulled together some general information, as well as some of the costs you’re likely to come across. Remember, it’s also important you speak to a professional and are across any contract complexities before making any decisions.

1. What you can expect 

Retirement villages are generally complexes made up of individual residences. While they were traditionally designed to cater to the needs and lifestyles of people aged 55 and over, the average age of new residents entering retirement villages is currently 753.

Retirement villages are typically self-funded and do not receive government funding or subsidies4. Many offer a range of health, leisure, and support services, and will often include medical facilities, as well as recreational facilities, such as community halls, bowling greens, libraries, and pools.

2. How village residents rate life

According to a national census, the three main reasons residents said they wanted to move into a village were, they wanted to downsize while they could, their former home was becoming too big to manage, and they wanted freedom from house responsibilities to pursue other interests5.

Here are some additional insights from the survey 6:

  • 68% of residents stated their confidence and feeling of security increased slightly to significantly after moving from the family home to their retirement village

  • 73% of residents stated that they were ‘very satisfied’ to ‘extremely satisfied’ that their expectations of their retirement village had been met

  • 75% said they were happy with their decision to move into their retirement village and would make the same decision again.

3. The most common way to pay

There are many different payment models—the ‘loan/licence’ (or licence to occupy) model a popular one among retirement villages7.

Under this model, here are some common costs and considerations you’re likely to come across—and note, the way figures are calculated will differ depending on the retirement village8.

Typical costs include:

  • An entry contribution, which may be refundable, minus an exit fee (commonly referred to as a deferred management fee), which will be payable on your departure

  • Ongoing charges to cover things like maintenance and general services provided by the village, which may still be payable for a period of time after you’ve left.

You also need to consider:

  • How capital gains may be retained by the operator and shared with you upon your exit

  • The potential for special levies to fund new services or refurbishments.

4. How different payment models can vary

The Australian Government has indicated that different fee structures make it difficult to compare the affordability of different retirement villages9, but here’s some general information on the three most common payment models to give you a bit of guidance10:


  • This model is used by about 50% to 60% of retirement village operators. 

  • As mentioned above the main fees include an entry contribution (which may be refundable), an exit fee, and ongoing service costs.

  • It’s important to note, your license agreement is not registered with the Land Titles Offices, and as such, offers lower security of tenure than a leasehold or freehold title.


  • This model makes up about 30% of retirement village arrangements, offering residents a long-term lease for accommodation, in exchange for a lump-sum payment. 

  • Leases are registered with the relevant Land Titles Offices, which offers residents security of tenure, but which may also attract stamp duty. 

  • Upon departure, you’re entitled to a lease termination payment minus the exit fee (deferred management fee). And note, in some cases, you will not receive your payment until a new resident takes over the lease.

Freehold title

  • These models, where residents have 100% ownership of their retirement village unit, are not particularly common and make up less than 10% of retirement village arrangements.

5. Why contract terms are so important

There is much to think about when assessing your living arrangements in retirement, particularly when it comes to signing contracts and making sure you understand the fine print.

How different villages charge can vary significantly and some residents may be subject to different fee structures. On top of that, what you pay could also change over time to reflect occupancy demand, changes in ownership and fluctuations in property prices11.

Depending on the arrangement, there’s the potential to benefit from having access to home equity or to defer a large portion of your costs until a later date12.

For these reasons, it’s very important to speak to your financial adviser and a legal professional before signing anything. 

If you seek further professional advice please contact us on |PHONE| 

Source : AMP 24 November 2017 

1, 4 Property Council of Australia – National overview of the retirement village sector – October 2014 pages i, 2
2, 5, 6 
The McCrindle Baynes Villages Census Report 2013 pages 8 / 5 / 8, 7, 5
PwC / Property Council Retirement Census 2016 pages 3
7 – 12 
Housing Decisions of Older Australians Productivity Commission Research Paper – December 2015 page 99 / 99 / 100 / 99 / 100 / 101

This article provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

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