The ABC program, Four Corners, recently ran an exposé regarding a major Retirement Village operator in Australia.  As background for those who have not seen the program, there was concern about the level of fees being charged to the residents of the Retirement Village in particular, when someone leaves the Village and sells their unit – often described as deferred management fees.

This is a good reminder of a very important concept to understand as there is a clear distinction between a Retirement Village and Residential Aged Care.

Retirement Village

  • They are open to those over 55 years old, generally via a 99-year lease arrangement that can be on-sold under certain conditions.
  • They are generally more of a “lifestyle” decision than a health care-based decision.
  • You will often pay some type of weekly or monthly management fee for the maintenance of the facility as well as a provision of services they offer.
  • Your contract with the Village will outline how, when and who you can sell your unit to when you exit the Village.  It’s not often you can use the local real estate agent as this is not a ‘normal’ property transaction.
  • Your contract will also outline what fees the Retirement Village will charge you upon exit. We have seen contracts that take 50% of any capital gain on the property or perhaps 30% of the total sale price.
  • The resident exiting the Retirement Village will often have to meet the refurbishment costs of the unit for the incoming resident.


Retirement Villages are not something you want to be in and out of quickly.  If it is reasonably foreseeable that you may need additional care in the near future, perhaps staying in your own home and accessing some home care may be a better option.

Residential Aged Care

  • Is open to anyone of any age (typically the elderly though).  Importantly, you can only enter a facility if you have an assessment (known as an ACAT assessment) done that confirms you qualify to enter Residential Aged Care.
  • You will either ‘buy’ or ‘rent’ your room and pay a daily fee for your care.  A large portion of your daily care fee is subsidised by the Government and how much you pay is determined by a formula, which takes into account your means to pay the fees.
  • Depending on how you pay for your room, your deceased estate can receive 100% of what you paid for the room in the first place (this is very different to a Retirement Village).


There are now a number of ‘dual’ facilities on the market where they offer you a Retirement Village unit initially and as your level of care increases, you move into Residential Aged Care, all within the one facility.  On face value, this seems a good idea however, we find this can lead to a false sense of security as you will still be technically required to exit your Retirement Village agreement (incurring the deferred fees outlined above) before entering a Residential Aged Care agreement.

As the Four Corners program highlighted, this is an incredibly complicated area to navigate.  Retirement Villages are not all bad; they can be fantastic for the right person. It’s incredibly important you and those around you understand what you are purchasing because there’s more to it than just downsizing into a small unit.

If you or someone near to you is considering a move, we cannot stress enough the importance of getting professional legal and financial advice from people who know how the industry works, to ensure you and your family understand if this is the right decision.

Contact The Investment Collective today to set up an obligation free meeting to discuss the suitability of a retirement village or residential aged care with an adviser and which would be more suitable for you according to your personal circumstances and personal goals.