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The Hidden Costs of Retirement Living: What Every Resident Should Know Before Signing
Moving into a retirement village can be one of the most exciting transitions in later life. It promises security, connection, and freedom from the day-to-day hassles of maintaining a home. But behind the glossy brochures and landscaped gardens, many residents discover unexpected costs they didn’t fully understand when they signed their contracts.
At Retirement Village Solutions, we’ve seen this story too many times — enthusiastic new residents who later regret not getting expert advice before moving in. Let’s lift the curtain on the most common hidden costs so you can make an informed decision.
- The Deferred Management Fee (DMF)
The DMF is the big one — and often the least understood.
Most retirement villages don’t make their money from the purchase price itself but from a percentage of that price when you leave. This can range anywhere from 20% to 35% of your entry payment, often calculated over your years of residence.
For example, a 30% DMF on a $500,000 unit means $150,000 will be deducted when you exit. That’s a serious amount to factor into your financial planning.
Tip: Always ask how the DMF is calculated, what the cap is, and whether it’s based on your entry price or the resale value of your unit. Small details make a big difference.
- Refurbishment and Reinstatement Costs
When you leave, you may be required to bring your unit back to “marketable condition.” This can mean repainting, replacing carpets, or even updating fittings — all at your expense. Some operators manage this fairly; others pass on far more cost than residents expect.
Ask: Who decides what needs refurbishing? Can you arrange your own contractors, or must you use the village’s preferred ones?
- Exit and Selling Fees
In addition to the DMF, there are often administration or sales fees when your unit is resold. If you use the village operator as the selling agent, they charge a commission for that service.
Tip: Check whether you can choose your own real estate agent and what percentage commission applies.
- Ongoing Maintenance and Recurrent Charges
Monthly or fortnightly maintenance fees cover services like gardening, common area cleaning, and management costs. These fees can rise over time, sometimes faster than inflation, and they’re payable even if you’re away for extended periods.
Ask whether there’s a cap on annual increases and how the village manages costs for shared facilities.
- Capital Gains (or Losses) Sharing
In some villages, if your unit increases in value, the operator takes a share of the profit when it’s resold. Others pass all capital gains (and losses) to you. Both arrangements can work — but you should know which applies before you sign.
Example: If your unit sells for $600,000 but the operator takes 50% of the $100,000 gain, you only receive $550,000. On top of that, the DMF is still deducted.
- The “Lifestyle Fee Trap”
Some modern lifestyle communities charge for premium services like wellness programs, concierge services, or transport. These add comfort and convenience — but also recurring costs that can escalate quickly.
Tip: Ask what’s included in your standard fees versus optional extras. Transparency is key.
- Why Expert Due Diligence Matters
Retirement village contracts are complex legal documents — often 60–100 pages long — and they vary widely between operators. It’s not enough to skim through or rely on a friendly salesperson’s explanation.
At Retirement Village Solutions, our team specialise in reviewing these contracts under the NSW Retirement Villages Act and identifying any clauses that could cost you thousands later. We’ll help you understand what you’re signing and what it truly means for your financial future.
Peace of Mind Before You Move In
The decision to move into a retirement village should bring confidence, not confusion. With the right advice, you can enjoy your new lifestyle knowing there are no surprises down the track.
Before you sign, let us help you do your due diligence — so your next home feels like freedom, not fine print.
Contact us today for a confidential review.
📞 0403 984 500
📧 info@retirementvillagesolutions.com.au
🌐 www.retirementvillagesolutions.com.au