Retirement Village Exit Fees: Ask for the Dollars, Not the Percentage

The brochure gives you a percentage. The contract gives you a formula. Only one of them tells you what you get back.

Ask for the dollars. A percentage is not a number you can spend. On a $600,000 unit, a 32.5 per cent cap takes $195,000. The same 32.5 per cent applied to a $750,000 resale price takes $243,750. Same percentage, $48,750 more. The base decides the difference, and the base is in the contract.

What the exit entitlement is

The exit entitlement is what the contract says you get back when you leave. It is not the price the unit fetches, and it is not the entry payment either. It is the entry payment adjusted by the contract’s own rules.

The adjustments usually run in one direction. The deferred management fee comes off. Outstanding recurrent charges come off. Reinstatement, refurbishment, selling and marketing costs come off where the contract allows them. What remains is the figure the contract calls the exit entitlement, and a refund in ordinary speech is usually that net figure rather than the entry payment.

The contract also says what interest you hold. In many villages it is a lease or a licence rather than the freehold title you would hold buying a house. Tenure varies between villages and between contracts. The first question is what this contract says you hold, and what it says you get back. Those are different questions, and the second one produces a number.

For most households the entry payment comes out of the family home. That makes the condition and timing of the house sale part of the exit calculation, because the sale funds the entry. The guide to gutter upgrades worth doing before you sell is a practical example: small exterior work can change a sale price, and the sale price is the entry payment.

A retirement village is not residential aged care. Entry to a village does not run through an ACAT assessment, and the fees here are contractual rather than the aged care means-tested arrangements. The two products turn up in the same family conversation, which is why the distinction belongs near the start. A village contract is a housing contract with an exit formula. Aged care is a different system with different rules.

The percentage is a percentage of something

Most explanations say the fee is a percentage per year, capped somewhere around 30 to 35 per cent. Few say what the percentage is a percentage of. That is the only part that changes the dollars.

Contracts apply the deferred management fee to one of two bases. The first is the entry payment, which is the amount you paid to get in. The second is the resale price, which is what the unit fetches when you leave. The same percentage on a different base produces a different fee, and the difference grows with the price gap between entry and exit.

Victoria’s rules for contracts signed from 1 May 2026 allow the fee only as a percentage of the entry payment and by reference to how long the resident lives in the village. An older contract, or a contract in another state, can still use the resale figure. That is why the base belongs in the first question you ask, not the last.

The arithmetic is short. Take a 32.5 per cent cap. On a $600,000 entry payment, the fee is $195,000. On a $750,000 resale price, the same cap produces $243,750. The percentage did not change. The base did. The difference is $48,750, and it comes out of the exit entitlement.

The base question also explains why two villages with the same headline cap can produce different outcomes. A village that applies the cap to the entry payment fixes the fee at the amount you paid. A village that applies it to the resale price lets the fee move with the market. Neither is automatically better for the resident. The point is that the contract has to be read to know which one applies, and the answer changes the dollars you are working with.

A worked exit on a $600,000 unit

The table below is a hypothetical, not a real village and not a quote. It assumes a $600,000 entry payment, a deferred management fee of 6.5 per cent of the entry payment a year, and a cap of 32.5 per cent. The cap is reached at year five, because 32.5 divided by 6.5 is five. The 6.5 per cent rate and the 32.5 per cent cap are illustrative. Your contract sets both, and many contracts set different figures.

The fee accrues at 6.5 per cent a year until it reaches the cap. After that it stops. A two-year stay costs $78,000. A three-year stay costs $117,000. A five-year stay hits the cap at $195,000, and a seven-year stay pays the same $195,000 as a five-year stay. The cap is why the last two rows are identical. A contract without a cap would keep adding 6.5 per cent, and the fee would be 13 percentage points higher after seven years.

Across five years the average cost is $39,000 a year. The average is a way of spreading the fee over the stay, not a separate charge, and it falls with a longer stay because the same dollars are divided by more years.

The exit entitlement in the last column is before the other deductions. Reinstatement or refurbishment, selling and marketing costs, and recurrent charges come off next, which is why the final refund can sit below the figure shown.

What else comes off first

The deferred management fee is the line the brochure talks about, but it is not the only one. Reinstatement or refurbishment comes off where the contract allows it. Selling and marketing costs come off where the contract allows them. Recurrent charges keep running until the village has vacant possession, and the contract says how long that obligation lasts.

Recurrent charges are the regular amount that keeps the village running. They are not part of the deferred management fee, but they can continue after the resident leaves until the unit is vacant. That is why the exit question includes a date as well as an amount.

Ask for each deduction as a dollar figure, not as a category. A contract that lists selling costs has not told you what the sale will cost, and a contract that lists reinstatement has not told you what the work will come to. The operator should be able to put an estimate beside each line, and the estimate belongs in the same written answer as the fee.

New South Wales sets some limits. General services charges can be charged for a maximum of 42 days after the resident leaves, cut short if a new resident moves in. Optional services stop when the resident permanently vacates. Those rules put a boundary on one of the running costs, and a resident who leaves early should check the boundary rather than accept an open-ended charge.

A refund is a net figure. The entry payment minus the deferred management fee is a ceiling, not a promise. Every other deduction moves the final number down, and the contract says which deductions are allowed.

How long it takes, state by state

The payment date is a separate question from the amount, and it changes the outcome as much as the fee does. A large entitlement paid eighteen months after moving out is a different outcome from the same entitlement paid in three months, even though the dollars are identical.

Tasmania, the ACT and the Northern Territory have their own Acts. The contract governs the date in those jurisdictions, and the relevant regulator is the place to confirm it. The table above names the five states where a primary source gave a rule. It does not guess at the other three.

A payment date is a promise about time, and time has a cost. A resident who leaves in January and is paid in December has been without the money for most of a year, which is why the date belongs beside the amount in any comparison. Two villages can offer the same formula and produce different outcomes on that difference alone.

The warnings are fair. An exit can take a year or more, and the amount that lands can be far below what the family expected. Disclosure has not always been good. That is exactly why the payment date belongs in the questions asked before signature, when there is still a choice about whether to sign.

The exit that costs nothing

Two jurisdictions put a clock on the start of the contract rather than the end. In New South Wales, the settling-in period is the first 90 days. A resident who leaves inside it pays no departure fee, and the refund timing depends on the contract type. In Victoria, no deferred management fee can be charged if the resident leaves during the settling-in period.

The clock starts when the resident starts living in the unit, and the contract should state exactly how the period is measured. A household that is uncertain about the move should know how long the settling-in period is, what it covers and what the contract says about the refund if the resident leaves inside it. That is a question with a date attached, and it is easier to ask before the signature than after.

Ask what happens to each line if the resident leaves inside the settling-in period. The entry payment, the deferred management fee and the recurrent charges should each have an answer in the contract, in writing, before the signature. A settling-in period that exists only in the sales conversation is not a term.

What you can see before you sign

Victoria requires the residence documents at least 21 days before signing, and the information statement must state exactly how the exit entitlement will be calculated. It must be given at least 21 days before signing and be available on the village website. Those rules give a Victorian reader a document to request and a period to read it.

The same request works everywhere, even where the timing rule differs. Ask for the formula, the base the percentage applies to, the cap, every other deduction the contract allows, and the date the payment is due. Ask for the figures in dollars at three, five and seven years. A contract that cannot produce those figures in writing is a contract with an unknown exit.

Ask the solicitor to run the contract’s own formula at three, five and seven years. The brochure’s percentage is not the formula, and the formula is what the solicitor can test against the contract’s definitions.

Before paying for extra advice, it helps to know what the law already requires. The same approach sits behind the guide to extended warranties and consumer guarantees: establish the statutory floor first, then decide what extra cover is worth paying for. A specialist solicitor is still worth the fee on a village contract. The statutory disclosure just tells you what to bring to the meeting.

The number to ask for

Not the percentage. The dollars.

Ask for the exit entitlement at three, five and seven years, in writing, before you sign. Ask what base the percentage applies to, because that is where the $48,750 sits. Ask what else comes off and when the balance is paid. The brochure’s percentage is a rate. The contract’s formula is the thing that produces a number, and the number is the only part you can compare across villages.

Two people can sign the same percentage and leave with very different amounts. The base, the cap, the deductions and the payment date are the four variables that decide which amount is yours. Get them in writing while the decision is still open.

This is general information, not financial or legal advice. A specialist solicitor who has read the contract is the right person to confirm the figures for an individual village.

Sources: Before signing a retirement village contract, Consumer Affairs Victoria (https://www.consumer.vic.gov.au/housing/retirement-villages/choosing-a-retirement-village/before-signing-a-retirement-village-contract); Retirement village contracts, Consumer Affairs Victoria (https://www.consumer.vic.gov.au/housing/retirement-villages/choosing-a-retirement-village/retirement-village-contracts); Leaving a retirement village, NSW Government (https://www.nsw.gov.au/housing-and-construction/aged-care-retirement-villages/leaving-a-retirement-village/non-registered-interest-holders); Retirement village exit fees and entitlements, Government of South Australia (https://www.sa.gov.au/topics/business-and-trade/operating-a-retirement-village/exit-fees-and-entitlements); Retirement village residents to gain more say and faster payouts, Consumer Protection WA (https://www.consumerprotection.wa.gov.au/announcements/the-commissioner-retirement-village-residents-gain-more-say-and-faster-payouts); A better life for retirement village residents, Premier of Victoria (https://www.premier.vic.gov.au/better-life-retirement-village-residents); Retirement Villages Act 1999 (Qld) s 63 (https://www.legislation.qld.gov.au/view/whole/html/inforce/current/act-1999-071); Retirement villages: Reselling a unit, Queensland Government (https://www.qld.gov.au/housing/buying-owning-home/housing-options-in-retirement/retirement-villages/leaving-the-retirement-village/reselling-a-unit)