Understanding what to consider when it’s time to choose the right retirement option is crucial. The cost to buy a home in a retirement village in Australia can vary widely and depends on a few factors.
They include:
- Location
- Size and type of home
- Standard of facilities and services provided, and
- The terms and conditions of the contract
Some retirement village costs include a substantial upfront payment, while others may have lower entry costs but higher ongoing fees.
Let’s take a closer look:
How Much Does a Retirement Village Cost?
According to recent research from the Property Council of Australia, the median entry price for a two-bedroom unit in a retirement village in 2021 was $484,000.
However, it’s important to note that this is only a rough guide. Prices can vary widely depending on the individual village and its location, size of homes and range of facilities.
Moreover, that is the entry cost only.
Residents of retirement villages are also subject to exit fees, deferred management fees, and capital gains fees. This means that while the initial purchase price might seem low, a large cost is tacked on at the end which can affect the amount you will receive when you decide to sell.
We explore this topic in more depth below.
What are the Retirement Village Costs Before You Move In?
The entry fee for a retirement village can take many forms, and may include one or more of the following:
Purchase price: In some retirement villages, residents purchase their unit or apartment like buying a house or apartment. In other retirement villages you are only buying the right to occupy. You do not own your home. We have an article
Refundable deposit: Some retirement villages require residents to pay a refundable deposit when they move in. This deposit is typically returned to the resident or their estate when they leave the village.
Ingoing contribution: This is a lump sum payment that is made by the resident when they move in. The ingoing contribution is designed to cover the cost of accommodation and communal facilities and services.
Service fee: Some retirement villages charge a service fee as part of the entry cost. This fee is designed to cover the cost of services and facilities to residents, such as maintenance, repairs, and insurance.
Here’s what to expect:
1. Waiting List Fees
Retirement village wait list fees may be charged to secure a place on a waitlist for a particular retirement village. These fees are typically non-refundable.
The amount of the waitlist fee can vary depending on the retirement village but is usually in the range of $100 to $1,000. Some retirement villages may also charge an ongoing fee to remain on the waitlist.
2. Deposits
There are cooling off periods and refund policies in place for retirement village deposits in Australia. These are designed to provide residents with an opportunity to reconsider their decision and make changes if necessary. This cooling off period protects residents from financial loss in the event of unexpected circumstances.
Cooling off periods for retirement village deposits can vary but are typically between 7 and 14 days. During this time, the resident has the right to withdraw from the contract without penalty or loss of deposit.
Refunds on retirement village deposits may also be available in certain circumstances and are typically outlined in the contract.
3. Land Transfer Fees & Stamp Duty
The land tax and stamp duty fees payable in retirement villages in Australia can vary depending on the individual circumstances and the state or territory of the location of the retirement village. In general, the fees that are payable may include:
Land transfer fees: are payable when a unit or apartment in a retirement village is sold or transferred to a new resident. These fees may vary depending on the state or territory and are usually payable by the seller or outgoing resident. They may be calculated as a percentage of the sale price of the unit or apartment, while in others they may be a fixed amount. The fees may also vary depending on the value of the property being transferred.
Stamp duty: Stamp duty is a tax payable on the purchase of property, including units or apartments in retirement villages.
What Ongoing Retirement Village Costs Do Residents Pay?
Retirement villages typically charge a range of ongoing costs to cover the cost of services, amenities, and maintenance to residents. The specific costs and fee structures can vary depending on the village, but may include:
- Service fees and maintenance fees
- Insurance fees
- Utilities fees
- Amenities fees
- Health and care fees
4. Management Fees
Management fees are a catch-all term for a range of fees:
- Service fees cover the costs of cleaning, gardening, security, and administration.
- Maintenance fees defray the cost of maintaining and repairing the physical infrastructure of the village, including buildings, roads, and communal areas.
- Amenities fees provide recreational and social amenities to residents, such as swimming pools, gyms, and community centres.
5. Services & Utility Bills
Of course, moving to a retirement lifestyle doesn’t mean being free of everyday expenses. In addition to your personal bills, you may also need to contribute to the village’s general insurance and utilities fees.
6. Add On Fees & Services
Some retirement villages may also offer health and care services, such as nursing, personal care, or other forms of assistance that incur additional fees.
What if You Decide to Leave?
There are many reasons why you might choose to leave your retirement village. Perhaps you would like to be closer to family, or you need to move to a place which has more intensive medical support.
When that time comes, you could find yourself out of pocket significantly. This is particularly important to note if you intend to use the proceeds of the sale of your retirement village home to fund your next location.
Earlier in this article, we discussed the entry fees you may be charged when buying into a retirement village. Now we look at some of the expenses you might be up for.
7. Deferred Management & Exit Fees
As the name suggests, deferred management fees are a deferred payment that residents must pay the retirement village operator if/when they decide to the depart the village. The fee is the charged as a percentage of the sale price of the unit or apartment. Retirement villages charge deferred management fees to cover the cost of any facility and amenity service provided to the residents during their time living in the village.
Exit fees are charged to offset the cost of running the resort and keeping its facilities to a high standard, they encompass a wide variety of fees which may include recurrent charges, capital gains, refurbishment fees and other fees stipulated in the residents individual contract.
8. Capital Gains & Sales Commission
Another retirement village cost that many residents aren’t aware of include a portion of the capital gains earned on the property upon sale. Did you know that in some retirement villages the operator may take a percentage of the capital gains made when you sell your home?
This is done to recover some of the costs associated with providing residents with a range of services and amenities. The capital gains fee is based on the increase in the value of the property since it was first purchased. This fee is calculated as a percentage of the capital gain, and the percentage can vary depending on the specific retirement village.
You may also be obliged to use the retirement village operator to sell your home, which means paying sales commission on top of other fees.
9. Repairs & Refurbishment Fees
Always read the retirement village terms and conditions carefully before you sign on the dotted line. You might be surprised to learn that you have to spend time and money bringing your home up to ‘as new’ condition before selling it or pay the resort operator a fee to do that for you.
In short, before deciding to buy into a retirement village, it’s important to carefully review the terms and conditions of the contract, including any fees that may be charged, and to seek advice from a financial advisor or legal professional if you have any questions or concerns. This will help you to make an informed decision about whether a retirement village is right for you, and to choose a village that meets your needs and budget.
How Much Do Over-50s Lifestyle Resorts Cost?
Over-50s lifestyle resorts like GemLife are quite comparable in price to retirement villages in similar locations. However, there are important differences between retirement villages and lifestyle villages you might want to consider, particularly if you are young and active.
The first of these are land lease community (LLC) resorts. This means you own your own home and your right to live there is guaranteed by state legislation.
The only ongoing charge is a modest weekly site rental fee which covers the cost of the on-site resort management and maintaining the facilities.
Here are some differences you may want to consider when choosing the right retirement community:
No Deferred Management Fees
Unlike many types of retirement living, there are no deferred management fees or exit fees. There are no capital gains fees either, which means you keep 100 percent of the capital gains and the proceeds from the sale of your house.
At GemLife, we believe this is a much fairer contract for older Australians.
No Stamp Duty
Instead of purchasing the land and the home outright, residents of land lease communities typically lease the land from the community owner and own the home itself.
Since land lease community homes do not involve the transfer of land ownership, they are not subject to stamp duty in some states and territories. Instead, residents pay a rental fee for the land they occupy, as well as any associated fees for maintenance and management of the community.
Rental Assistance is Available to Eligible Residents
Because homeowners in land lease communities like GemLife do not own the land their home sits on, meaning they are technically ‘renting’ the land, Australian Pension or Department of Veterans’ Affairs card holders may be eligible for rental assistance that helps reduce the cost of the weekly site rental.
Discover a Whole New Life at GemLife
There is a lot to digest when it comes to understanding the costs of retirement living. But at GemLife, we believe your next chapter should be spent enjoying life rather than worrying about fees and costs.
Experience the best of retirement living with GemLife’s beautiful resorts and fair land lease model structure in some of Australia’s most sought after locations including Woodend, the Gold Coast, Lake Cathie, Moreton Bay, Highfields and the Sunshine Coast.
Reach out today to a free information pack about our beautiful resorts and premium facilities located in some of the most sought-after locations in the country.
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