Retirement Village vs Residential Aged Care: Legal and Financial Differences in Victoria

Comparison at a glance

Retirement villages: contract and legal features

A retirement village is a lifestyle and property arrangement, not aged care. Residents typically hold an occupancy right (a lease, licence, unit-trust interest or strata title) rather than owning the underlying land in the way an ordinary homeowner does. The relationship is governed by:

• a residence contract with the operator;
• a separate service or management agreement;
• village rules; and
• the Retirement Villages Act 1986 (Vic) and its regulations.

The commercial structure is front-loaded (an ingoing contribution) and back-loaded (a deferred management fee deducted from the exit entitlement, plus refurbishment and resale costs). For the full framework, see our Victorian retirement villages guide and our article on retirement village contracts explained.

Residential aged care: agreement and cost features

Residential aged care is Commonwealth-regulated care for people who need help with personal care and daily living. Providers must be approved and are regulated by the Aged Care Quality and Safety Commission. The main documents are:

• a Resident Agreement covering services, fees, rights and complaints; and
• a separate Accommodation Agreement covering the accommodation price and whether it is paid as a RAD, DAP or combination.

Ongoing costs are the Basic Daily Fee (set as a percentage of the age pension), a means-tested care contribution assessed by Services Australia, and any additional or extra-service fees the resident agrees to. For a detailed cost walk-through see our guide to aged-care costs, RAD, DAP and the fee reforms, and for a signing checklist see our aged-care resident agreement checklist.

Support at Home and care at home

Support at Home is the primary Commonwealth in-home aged-care program. It commenced on 1 November 2025 and replaced Home Care Packages and Short-Term Restorative Care. It funds services delivered in the person's own home — personal care, nursing, allied health, home modifications and assistive technology — with client contributions varying by service category and means-testing.

From a legal perspective, Support at Home involves a service agreement with an approved provider, not a residence or accommodation contract. There is no RAD, no DAP and no accommodation price. It is not covered by state retirement-villages legislation. The relevant legal questions are usually about capacity, family authority and coordination with the person's Will and enduring powers of attorney — not about accommodation terms.

Capacity and who can make decisions

All three regimes turn on the same underlying question: does the person have decision-making capacity for the particular decision, and if not, who has legal authority to act? A validly executed enduring power of attorney (financial) generally covers signing retirement-village contracts, aged-care Resident and Accommodation Agreements and Support at Home service agreements. Where no valid appointment exists, VCAT administration and, if necessary, guardianship may be required. See our powers of attorney in Victoria guide for the framework.

What happens when needs change?

Most people do not stay in one setting for the whole of later life. Common transitions include:

• Home → Support at Home. Increasing care needs while remaining at home; a service agreement is entered with an approved provider.
• Home → retirement village. Downsizing from the family home into an independent-living village unit; sale of the family home usually funds the ingoing contribution.
• Retirement village → residential aged care. Care needs exceed what independent living can support; the village exit process runs in parallel with the aged-care entry process. Timing risk is significant — the village exit entitlement may not be paid until the unit is resold, but the aged-care accommodation price is due at entry.
• Support at Home → residential aged care. Care needs exceed what can safely be provided at home.
• Aged care → different aged-care facility. A change of provider mid-stay, requiring a new Resident Agreement and Accommodation Agreement (and refund of any RAD paid to the previous facility, subject to permitted deductions).

Each transition is a legal event as well as a personal one. Independent legal advice — coordinated with the family's financial adviser — usually pays for itself in avoided errors.

What happens if the resident dies?

• Retirement village. The right to occupy ends. The exit entitlement is calculated (after deferred management fee, refurbishment, resale commission and any capital-gain/loss sharing) and paid to the estate, subject to the resale-timing rules. Recurrent charges may continue until resale. See our detailed guide to what happens when a village resident dies.
• Residential aged care. The Resident Agreement ends. Any RAD balance is refundable to the estate within the statutory timeframe, subject to permitted deductions. Final account reconciliation and collection of personal belongings sit with the executor.
• Support at Home. Services cease. There is no accommodation payment to refund; unpaid client contributions or unused funding are reconciled with the provider.

Legal checklist for families

• Identify which regime is actually in play — village, aged care or Support at Home.
• Locate the current, valid enduring power of attorney (financial) and confirm scope.
• Review the resident's Will — a move often triggers estate-plan changes.
• Obtain and review the specific contract(s) before signing, not after.
• Coordinate timing where a village exit is funding an aged-care entry.
• Confirm complaint and dispute pathways for the relevant regime.
• Coordinate legal, financial and accounting advice — none of them substitutes for the others.
• Document family decisions in writing, especially where multiple adult children are involved.

How we help

Our retirement living and aged care team advises across the three regimes — reviewing retirement-village contracts, aged-care Resident and Accommodation Agreements and Support at Home service agreements; confirming signing authority; coordinating with the resident's Will and enduring powers of attorney; and acting in disputes. We work alongside financial advisers and accountants where the situation calls for it.

Frequently Asked Questions