How do retirement villages work in Australia?

About 260,000 Australians over the age of 55 live in retirement villages. Many of these Australians love their retirement lifestyle, and their retirement community. But how does a retirement village work?

Here is a guide that answers the biggest questions around the way that retirement villages operate. 

This article is based on Southern Cross Care’s operating model. It is not necessarily true for other retirement living providers. 

Why choose retirement living? 

Many people love the lifestyle of a retirement village. You have added security for peace of mind and are surrounded by like-minded neighbours. You have an age-friendly home and other lifestyle facilities.

The operating factors of a retirement village set up the right environment for a community to flourish. For more information on the benefits of retirement living, visit our Understanding Retirement Living page.

What are the requirements? 

All retirement villages have rules that apply to people moving in. 

For example, at least one person in the home must be retired, because these communities are specifically for retirees over 55. 

Other requirements may include getting approval to add something to your home, such as solar panels. This is because the house is occupied under a leasehold and not owned by you. 

Another requirement is that you gain approval to have a pet, although most retirement villages are pet friendly. The approval of pets ensures everyone in the community feels safe around their neighbours. 

What are the financial factors? 

Southern Cross Care operates seniors retirement living villages across SA, and in the NT and Victoria. These villages include villas and assisted living in serviced apartments. The different types of over 55 retirement homes and different locations mean there are different financial models and costs. 

Residents pay an ingoing contribution to Southern Cross Care. This is paid as a refundable deposit fee of between $500 and $5,000 when an application for a home is made and accepted. The balance of the ingoing contribution is paid on the date of settlement. The amount varies depending on the home size, the number of bedrooms, location and more.

All residents living at a Southern Cross Care site occupy their homes under a Leasehold arrangement. Southern Cross Care owns the title of the property, and The Retirement Villages Act and the Residence Agreement protect the residents’ tenure under a lifetime lease.

The rights and obligations of residents are set out in the lease, and cannot be changed without the residents’ consent. So although the residents do not have the title to their home, each resident has the exclusive right to occupy their home for their lifetime, subject only to certain exceptions set out in the Retirement Villages Act. 

You have 90 days from when you move in or 180 days from settlement (whichever is earlier) to decide if you like the retirement community lifestyle. If you don’t like it, Southern Cross Care will refund your money in full, less market rent for the time that you have occupied the villa, and less other expenses incurred.

There is also a regular maintenance fee. The maintenance fee is designed to simplify household budgeting by incorporating many of the typical household costs into one regular charge. Additionally, it also funds the ongoing operation of the facilities and services provided as detailed in your Agreement.

The maintenance fee is levied to meet the cost of:

• Rates and taxes – e.g. council, water, emergency services levy
• Insurance (excluding contents) of building, common areas, plant and equipment
• Public lighting
• Repairs, painting and maintenance of buildings and equipment
• Use and maintenance of all common facilities
• Administration costs – wages for manager, administration, gardening and maintenance staff.
• Cleaning of common areas, rubbish removal
• Replacement of hot water services.
• The maintenance fee is paid every four weeks. 

When you leave the village and are no longer occupying your home, there is a Deferred Management Fee (DMF) or exit fee. This fee is a portion of what you paid to enter the village and is used to prepare your home for the next retirees to move in. For example, it may include the cost of renovating or real estate costs for onselling. The exit fee is charged at a different rate depending on how long you have lived in the home for.

Your responsibilities

In Southern Cross Care’s independent living villas, residents are responsible for: 

• internal cleaning
• general housekeeping
• personal phone bills
• contents insurance
• groceries and meals
• emergency call system (in most communities)
• any pay-TV and internet services (cabling provided). 

An independent living apartment, or serviced apartment, has the same responsibilities for residents but offers support with: 

• weekly cleaning
• weekly linen services
• chef-prepared meals provided twice daily. 

To see the types of retirement properties for sale through Southern Cross Care right now, visit our Properties for sale page.