Retirement Village

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Not all retirement communities are officially a retirement village, retirement communities can come in a variety of different shapes and sizes.

Retirement Village

A Retirement Village operates under the relevant state or territory legislation which typically sets a minimum age of 55. This legislation generally provides a definition of what is and isn’t considered to be an Retirement Village, sets out what legal documents (including disclosures) are required to be provided to residents by the village operator, regulates some (not all) financial arrangements and provides framework for the resolution of disputes.

Here is a video and a legal definition of a retirement village courtesy of Consumer Affairs Victoria.

Legal definition of a retirement village –
Not everything that looks like a retirement village is one. A development that is a ‘retirement village’ covered by the Retirement Villages Act 1986 is a community where:

most residents are 55 years or older or are retired from full-time employment (or are spouses/partners of such people)
residents receive accommodation and services, other than services provided in a residential care or aged care facility, and
at least one of the residents, as a contractual condition of entering the retirement village, paid an ingoing contribution that was not rent. It does not matter who made that payment, or whether it was a lump sum or by instalments.
If a community meets this legal definition of a retirement village, every resident is protected by the Retirement Villages Act 1986, whether they paid an ingoing contribution, or own or lease their unit.

The owner of land to be used as a retirement village must lodge a ‘retirement village notice’ with the Land Titles Office. This notice is recorded on the land title, which can be checked on the Victorian Government’s Landata website.

It is illegal for anyone to offer contracts that claim to entitle a person to become a retirement village resident without lodging this notice.


There are many different forms of ownership with Retirement Villages, including freehold or strata title, company title, leasehold, licence and some operate under a rental model. The most common ownership model is a 99-year (or lifetime) leasehold or licence.

The costs associated with living in a Retirement Village can be summarised as: the entry cost, the ongoing cost and the exit cost.

1. Entry cost – This is the price paid to gain possession of the unit. This will be either the purchase price if it is strata or company title, or the amount of the interest-free loan you make to the developer if it is a lease or licence arrangement. The amount you pay determines if Centrelink or the Department of Veteran Affairs consider you to be a homeowner, whether the amount is an assessable asset and your entitlement to rent assistance. Consideration also needs to be given to the impact on pension entitlement itself.

2. Service charges – Irrespective of the method of title held, residents are responsible for the ongoing costs of the village. These include insurance, water rates, general lighting, staff wages, and repairs and maintenance. Residents may also be responsible for the internal maintenance of their unit, plus the cost of their own utilities and insurance of their personal effects.

Many Retirement Villages also require outgoing residents to pay the cost of refurbishment of the unit and this will be part of the calculation of the departure fee. See page 5 for further information on – Refurbishment Costs .

3. Deferred management fee (DMF) – This is the cost that causes the most confusion. There are a number of different ways in which the Deferred Management Fee can be calculated, and in some cases the Retirement Village operator will give a choice of models. In looking at the models it is important to understand if the Deferred Management Fee will be calculated using the purchase price or the exit sale price and whether it will be before or after any capital gain sharing. See page 3 for further information on the – Deferred Fee .

4. Exit Costs – Traditionally exit costs have been the deferred fee, a reinstatement fee or more recently a refurbishment fee, selling costs and in some contracts an administration fee.


Demountable Home Parks (also known as manufactured home parks or land lease parks)

Demountable Home Parks are generally classified into two groups: those that originated from caravan parks for tourist accommodation and also offer permanent sites (often in a distinct area) and those that are purpose-built villages or communities marketed to retirees. While they operate under Caravan Park and Demountable Home Park legislation, they are often called things like ‘Over 55’s Community’, ‘Retirement Resort’ or ‘Lifestyle Village’.

Demountable Home Parks built for the retiree market have the look and feel of a bricks and mortar retirement village with communal facilities such as swimming pools, bowling greens, tennis courts etc. They normally have bigger units, with the majority being two- or three-bedroom units and very few single-bedroom units. The units themselves can be hard to pick as demountable, particularly when there is a garden surrounding them and they come with all the ‘mod cons’.

The key difference between a Demountable Home Park and a Retirement Village is that the loan, licence or lease arrangement is over the land, not the building. This poses a unique set of circumstances for people living in these communities making residents both a homeowner and a tenant at the same time. Traditionally, there have been no entry or exit fees, however, some of the new communities do charge an exit fee.

Due to the nature of ownership within a Demountable Home Park i.e. you own the home but rent the land (often called ‘site fees’), rent assistance is often payable to residents of these communities who are pensioners.

One of the main concerns for residents of Demountable Home Parks is increases in site fees (rent). The leases offered vary from one to the next and one resident to another. While the lease will indicate the rate at which the rent will be increased during the period of the lease (e.g. CPI) for those with shorter leases their expiry can bring uncertainty about the affordability of the new lease.

Here is a video courtesy of the Consumer Action Law Centre.

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