Cost of Living in a Retirement Village

Posted by arenburg
22 October

The cost of living in a retirement village can be a major cause of concern. Even with the increased disclosure required by the recent changes to the Retirement Village Act, many potential residents struggle to fully understood all of the costs that come with moving into a retirement village.   This is not surprising as the details on the charges and fees a resident is responsible for can be spread across several different documents.

As the vast majority of retirement villages offer residency on the basis of a lease or a license, we will focus on the costs and expenses usually associated with these arrangements rather than the increasingly less common freehold title.  

The starting point for all potential residents when assessing costs is the Village Comparison Document. This document will set out the headline costs of living in the village but provides only generic detail to enable a rough comparison between different villages. The next step will be arranging with the retirement village operator to provide a Prospective Costs Document. The detail in this document is specific to  you and the unit you intend to occupy. For this reason, the operator may require some information from you in order to complete the Prospective Costs Document.  

Both the Village Comparison Document and the Prospective Costs Document must be provided to you at least 21 days before you and the operator enter into a residence contract in the form of a lease/license. 

Entry Costs – Ingoing Contribution and Other Expenses

Upon entering into a retirement village, you will pay an ‘ingoing contribution’ which is the amount paid to secure the right to reside in a particular unit in the retirement village. This may also be referred to as the ‘purchase price’. This is a one-off amount paid to secure the right to reside in the particular unit, it does not include any ongoing charges or exit fees payable to the owner/operator of the retirement village.  

You will also likely need to pay costs related to entering into the residence contract such as the owner/operator’s own legal expenses, lease registration costs, General Services Charges (see below – that may need to be paid in advance) and, any other costs as set out in Part 3 of the Prospective Costs Document.

There are also the personal costs such as your own legal and financial advice and the cost of relocating from your existing dwelling (such as removalists, selling or vacating your existing dwelling and, possibly storage of furniture or equipment that will not fit in the new unit). These costs will not be set out in the Prospective Costs Document but should be included when working out the total cost of living in a retirement village. 

Ongoing Costs and Other Expenses

Once you have moved into the retirement village there will be a number of ongoing costs that must be paid, either monthly or fortnightly. These costs are generally referred to as the ‘General Services Charge’ and the ‘Maintenance Reserve Fund’. These costs must be set out in the Village Comparison Document and they are also listed in the Prospective Costs Document.

The ‘General Services Charge’ is paid by residents for the general services supplied or made available to the residents in the village. This may include management and administration costs, general maintenance of the village, gardening and other services or facilities for recreation and entertainment.

The ‘Maintenance Reserve Fund’ contribution is paid by residents for maintaining and repairing (but not replacing) capital items in the village such as communal facilities, swimming pools, tennis courts, cinema rooms etc..  This fund is unlikely to cover maintaining or repairing items in your unit, so it is important to carefully check the residence contract to see what the fund does cover.

The village owner/operator is required by law to set the budget for the ‘General Services Charge’ and the ‘Maintenance Reserve Fund’ contribution each financial year and the residents are notified of the budgeted amount. The amount to be held in the ‘Maintenance Reserve Fund’ will be determined by the owner/operator using a quantity surveyor’s report.  

The budget for the ‘General Services Charge’ and the ‘Maintenance Reserve Fund’ contribution can, and is very likely to, increase each year at least in line with CPI. Increases beyond CPI will be due to increases that are outside of the control of the village operator, such as rates or electricity prices, or where the residents have agreed to an increase. You should budget for yearly CPI increases.

In addition to the ongoing costs set by the owner/operator, there will be a number of additional household and domestic costs that may add to the cost of living in a retirement village. Depending on what is included by the village in the ongoing costs, the additional expenses are likely to incur may include contents insurance for your property in your unit, public liability insurance (for people entering your unit), electricity, gas, water, telephone, internet, Pay TV etc.

There will also likely be costs associated with any additional services you receive as well as the costs of maintaining and repairing items in your unit such as unit fixtures, unit fittings and unit appliances.   Such additional costs that are not covered by the ongoing costs charged by the owner/operator should be set out in the Prospective Costs Document so you can see what extra costs you will need to budget for. Actual dollar amounts may not be provided so ask for examples or estimates so you can put together a reasonably accurate budget. 

Exit Fees, Reinstatement Costs and Other Expenses On Leaving the Village

On termination of the residence contract, you will be entitled to receive the Exit Entitlement. This is typically your Ingoing Contribution (or the purchase price paid by the new incoming resident) adjusted to take account of the Exit Fee, Capital Loss, Reinstatement Costs, Renovation Costs, Sales Costs and possibly the General Services Charge (for a period after vacating the unit). While it will be clear from the Prospective Costs Document as to who will have responsibility for these payments, not all of the amounts will be ascertainable at the beginning of the contract.

The Exit Fee, most commonly referred to as a deferred management fee, will become payable by the resident upon termination of the residence contract. The deferred management fee refers to the percentage of the ingoing contribution or loan amount paid by you when you moved into the village that is retained by the owner/operator of the retirement village.  

The amount of the deferred management fee may be calculated in a number of different way but is typically based on the amount of the ingoing contribution and the length of time the resident lives in the village. The percentages and methods of calculation are headline items and are set out in both the Village Comparison Document and the Prospective Costs Document.

How the deferred management fee is structured is determined by the owner/operator of the village and it is very important to compare the deferred management fees for various villages. Most villages have a cap on the deferred management fee, but how that cap is spread over the years/days spent in the village can vary from village to village. It is important to find a deferred management fee structure that suits your circumstances.   Under Queensland legislation, the deferred management fee must be calculated on a daily basis.

The Capital Appreciation or Capital Loss is realised when the right to reside is sold and may also be added or deducted from the Exit Entitlement, according to the terms of the residence contract. How the potential capital gain/loss is allocated between you and village owner/operator may also determine how other costs associated with selling the right to reside are allocated (see below).

Reinstatement Costs to restore the unit to the condition it was in when the residence contract started (apart from fair wear and tear). The cost of reinstatement will not be known until you vacates the unit but the village operator may be able to give an estimate of the likely cost based on reinstatement work done in the past in comparable units.

Where Renovation Costs are payable, they will typically be apportioned on the basis of the apportionment of capital gains.

Sale Costs will include legal costs (yours and the village owner/operator’s), valuer’s fees (if you disagree with the village owner/operator as to the value of the unit) and any marketing fees. If you elect to appoint your own real estate agent you will also be liable for the agent’s fees and commission. These costs and fees will not be known at the start of the contract so it is worth asking for estimates based on previous sales.

It should be noted that there may be an obligation to pay ongoing costs after your residence contract is terminated until the right to reside in the unit is sold. This obligation may continue for a period of up to nine (9) months after the residence contract is terminated. The requirement to continue paying certain ongoing costs after leaving the retirement village and terminating the residence contract often comes as a surprise to many people.  


Reinstatement work means replacements or repairs that are reasonably necessary to reinstate an accommodation unit to the condition it was in when the former resident started living there; apart from fair wear and tear and renovations carried out with the agreement of the resident and you as the scheme operator.

Fair wear and tear includes a reasonable amount of wear and tear associated with the use of items commonly used in a retirement village.

Renovation work means replacements or repairs other than reinstatement work.


By law, a retirement village must provide a potential resident with all parts of the retirement village residence contract, the Village Comparison Document, a Prospective Costs Document for the residence contract and, if relevant, any by-laws for the village, at least 21 days before the potential resident signs the contract. It is a minimum of 21 days and a potential resident can take more than 21 days to consider their decision to sign the contract.

Take the time to work through the actual cost of your unit in the village beyond the headline ‘Ingoing Contribution’ that most people focus on. If necessary, ask the village owner/operator for examples from previous sales to help give you an ide of the total cost of the unit at the start of the contract, while you are in residence and when you leave.

If you are considering moving into a Retirement Village and would like to limit your risk we would be pleased to chat about how we can help on (07) 31815554 or .

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