Retirement village units in Victoria operate under a fundamentally different framework from regular residential property. Most are not purchased outright — buyers acquire a long-term lease, a loan-licence arrangement, or a strata-title unit subject to the village’s residence and services contract. The combination of entry fees, ongoing service fees, and exit fees (the Deferred Management Fee or DMF) can claim 25–40% of the purchase price by the time the resident leaves.
This guide covers the major Victorian retirement village ownership structures, the fee mechanics, and what every buyer (or family member helping a parent) should check before signing.
The four main ownership structures
| Structure | What you get | Resale rights |
|---|---|---|
| Strata title | Lot ownership + OC arrangements | Sell on open market (with restrictions) |
| Long-term lease (99-year) | Lease right + occupancy | Assign lease (operator approval) |
| Loan / licence | Right to occupy, refundable loan | Operator buys back at formula price |
| Rental | Residential tenancy | No equity |
The fee structure
Most retirement villages charge three categories of fees:
1. Entry / ingoing fee (the purchase price)
Typically $400,000–$1.5 million depending on location and unit type. Paid upfront. Some villages allow finance; others require cash.
2. Ongoing service fees
Monthly or fortnightly fees for shared facilities, maintenance, gardening, and (in some villages) personal care. Typical range: $400–$1,500/month. Often increase faster than CPI.
3. Exit fee (Deferred Management Fee)
The big one. The exit fee is calculated as a percentage of either the entry price or the resale price, increasing with length of residence. Common formulas:
- 3% per year, capped at 30% (10-year vesting)
- Flat 25–35% regardless of residence length
- Sliding scale starting at 20% and increasing to 40%
The total cost — illustrative example
For a $700,000 retirement unit, occupied for 8 years, with typical Victorian fee structures:
| Item | Cost |
|---|---|
| Entry / ingoing fee | $700,000 |
| Service fees ($800/month × 96 months) | $76,800 |
| DMF (25% of $700,000 entry) | $175,000 |
| Refurbishment / sales agent fees on exit | $25,000 |
| Capital gain (if any) — often shared with operator | Variable |
| Net amount returned on exit (typical) | $450,000–$510,000 |
| Net cost of 8 years residence | $190,000–$250,000+ |
Resale and exit timing
One of the most underrated risks: the village often controls when the unit is resold, and how. Key issues:
- Operator buyback periods. Some villages have clauses requiring the operator to buy back within 12–24 months of vacating. After that, the operator may not be obligated to act.
- Estate continues paying fees. If the resident dies, the estate continues paying ongoing service fees until the unit is resold. Wait times of 6–24 months are common.
- Resale price control. The operator often controls the listing price, agent, and marketing.
- Capital gain sharing. Some contracts share any capital gain between resident and operator (typically 50/50). The DMF is calculated on either entry or exit price — read which.
Statutory protections
The Retirement Villages Act 1986 (Vic) provides:
- Pre-contract disclosure.Operator must provide a Disclosure Statement and a Resident’s Information Document before contract signing.
- Cooling-off period. 5 business days from contract signing.
- Standard contract terms. Some terms are mandatory; others are voidable if unfair.
- Dispute resolution. VCAT has jurisdiction over most retirement village disputes.
Checks before signing
- Get the full Disclosure Statement (typically 50–150 pages)
- Read the Residence and Services Contract
- Calculate the total likely cost over expected residence
- Check the DMF formula and any capital gain sharing
- Confirm the buyback period and process
- Review service fee escalation history (last 5 years)
- Get a specialist solicitor review — typically $2,000–$4,000
- Compare with alternatives (downsized regular property, aged care, lifestyle village)
Ready to check your contract? Upload your Section 32 or Contract of Sale at precontractreview.com for a pre-contract check — typically in just a few minutes.