Aged Accommodation Choices – Retirement Villages

Retirement villages and assisted living units are an independent living option. The person buys the right to live in the unit under various types of contracts, but the government does not help with any of the costs.

Many villages only offer self-care units (assisted living units) for people who can look after themselves. Some villages also offer serviced units (serviced apartments), where residents can be provided with meals, house cleaning, laundry and some personal care for an additional monthly fee.

This is different to aged care where the person receives full care and the fees are regulated by government, with the government paying some of these fees. Fees for retirement villages are not subsidised by the government although people may still be able to access home care services.

Some complexes include both retirement villages and aged care facilities. These arrangements may make the transition to aged care (if required) less stressful especially when dealing with couples. The two operations are regulated quite separately under their respective legislation.

The questions below may provide a useful checklist to help guide you:

  • What is the entry contribution (purchase price)?
  • What are the ongoing service fees?
  • What are the exit fees/share of capital growth and exit conditions?
  • How much of the entry contribution would you receive back at departure?
  • Will the unit be easy to sell if you need to leave?
  • Do you know your responsibilities to maintain the unit while you live there and when you vacate it?
  • Do you understand the other resident rules?


Buying into a retirement village is generally not like buying a home. In most cases, the person will not own the premises but will enter into a private contractual arrangement that gives them the right to permanent tenancy. The amount payable by the person may be called a variety of names such as purchase price, entry contribution or accommodation bond.

Most arrangements can be categorised into five contract types. These are:

  • loan and licence arrangements
  • leasehold arrangements
  • strata schemes
  • rental arrangements
  • company title schemes.

Before moving into a retirement village, people should review the contracts carefully to understand the legal structure and seek legal advice. Each option may raise different issues for stamp duty, GST, service charges and fees, security of tenure, termination conditions and triggers, vacating the premises, capital gain or loss and credit risk. 

The purchase arrangements are complex and usually involve quite long contracts, therefore it is recommended that people get legal advice to make sure they understand the contracts.

People should also understand that because they don’t own legal title they will not be able to take out a reverse mortgage if they need to access equity.

Leaving the retirement village

Depending on the contract type, most people will need to sell their unit upon vacating. This is because they purchase the right to live there not the unit itself. People moving into aged care therefore will not need to consider the comparison for selling versus renting as they will only have the option to sell.

If they no longer live in the village sale of the unit is usually managed by the village operator. As such, the person may need to wait until the unit is sold before receiving their entry contribution (less exit fees) back. The person usually will not have the option to rent the unit to generate income while waiting for a sale.

Unlike residential aged care, repayment of the entry contribution is not guaranteed by the government.

Centrelink issues

As the person does not own the unit that they live in, Centrelink needs to use a different set of rules than homeownership to determine if the person is a homeowner or not. The rules are similar to those that apply for a granny flat arrangement.

If the person pays an entry contribution of more than the difference between the homeowner and non-homeowner asset test threshold at the time (currently $214,500) they are considered a homeowner and the value of the entry contribution is an exempt asset when determining their Centrelink entitlements. Deprivation rules do not apply and do not need to be considered.

If the entry contribution is less than the relevant threshold (ie $214,500), they are considered a non-homeowner and the value of the contribution is counted as an assessable asset (but not subject to deeming under the income test).

If assessed as a non-homeowner, the person may be eligible for rent assistance in relation to the service and maintenance fees paid to the village operator.