Retirement Villages in Victoria: A Practical Guide for Residents and Families

What Is a Retirement Village?

A retirement village is a residential complex designed for older Victorians — usually aged 55 and over — who want to live independently in a community of their peers. Villages typically offer self-contained units or villas, shared facilities such as gardens, a community centre, swimming pool or library, and an on-site manager or coordinator. Services such as emergency call buttons, social activities and bus outings are common.

In Victoria, retirement villages are regulated by the Retirement Villages Act 1986 (Vic) and the Retirement Villages (Records and Notices) Regulations 2025 (Vic). The legislation sets minimum standards for disclosure, contracts, dispute resolution and resident rights. Not every "over 55s" community is a retirement village in the legal sense — the test is whether the scheme satisfies the definition in the Act, which generally requires the payment of an in-going contribution in exchange for the right to occupy.

Retirement Villages vs Aged Care

One of the most common misconceptions is that a retirement village is a form of aged care. It is not. The two systems sit under different legislation, are funded differently and offer very different protections.

• Aged care is a Commonwealth-regulated service under the Aged Care Act 1997 (Cth), now transitioning to the Aged Care Act 2024 (Cth). It is means-tested, partly subsidised, and is designed for people who need help with daily living or nursing care. Entry is assessed through My Aged Care.
• Retirement village living is independent living under a private contract. There is no government subsidy of the entry contribution, no means test, and no clinical assessment. Residents who later need aged care must usually leave the village to access it.

Some operators run both a village and an aged-care facility on the same site, which can ease the transition. Even so, the two are governed by separate contracts and separate financial arrangements. A move from village to aged care triggers the exit provisions of the village contract.

Leasehold and Licence Arrangements

Most Victorian retirement villages operate on one of three models:

• Leasehold. The resident receives a long-term lease, often 99 years, registered or unregistered. The operator remains the owner of the land and improvements.
• Licence to occupy. The resident has a contractual right to occupy a specific unit but holds no proprietary interest in the land at all. The right is personal and ends on death or departure.
• Strata title or company title. A minority of villages offer registered ownership of the unit. Even then, the resident is bound by the village rules and a deferred management fee charged on resale.

None of these models is "better" in the abstract. What matters is the combination of model, fees, rights and obligations recorded in the contract. Two villages with different headline structures can produce very similar financial outcomes once all the fees are taken into account.

Entry Contributions

The entry contribution — sometimes called an in-going contribution, loan, or purchase price — is the upfront sum paid for the right to occupy the unit. In a typical Victorian metropolitan village, this can range from around $300,000 for a smaller unit in an older village to well over $1 million for a premium villa in a new complex.

For most residents, the entry contribution is funded by the sale of the family home. It is important to understand that, in a leasehold or licence village, this payment is not the purchase of an asset. It is the cost of acquiring an occupancy right that will end at some point — and most of it will eventually be returned, less the operator's charges, when the resident leaves.

Ongoing Fees

Residents pay an ongoing fee — often called a maintenance fee, service charge or recurrent charge — to cover the day-to-day running of the village. This typically funds:

• building insurance and council rates;
• maintenance of common areas, gardens, swimming pools and community facilities;
• on-site staff including managers and maintenance crews;
• utilities for shared areas;
• the long-term capital maintenance fund for major repairs.

Ongoing fees are usually paid monthly or fortnightly and adjusted annually. The Act regulates how increases can be justified and imposes consultation obligations. Residents should read the proposed annual budget carefully and ask questions before each year's fees are struck.

Deferred Management Fees

The deferred management fee (DMF) is the operator's main charge for providing the village. Unlike ongoing fees, it is not paid as you go — it accumulates during your stay and is deducted from the amount returned at exit.

A DMF is typically expressed as a percentage of either the original entry contribution or the resale price, accruing at a fixed rate per year of residence, capped after a set period. A common formula is 3 per cent per year for the first 10 years, capped at 30 per cent. On a $600,000 entry contribution, that can equate to a $180,000 deduction at exit. Other villages charge 5 or 6 per cent per year over a shorter period.

Two villages can advertise similar entry prices but produce very different exit results depending on:

• whether the DMF is calculated on the in-going or the resale price;
• the percentage and the cap;
• whether any capital gain or loss is shared with the operator; and
• what happens during the early-exit period.

Working through the long-term financial impact of these clauses before signing is one of the most important things a prospective resident can do.

Residents' Rights

The Act gives residents a substantial set of rights that cannot be contracted out of. These include:

• the right to a disclosure statement before signing;
• a cooling-off period after signing;
• quiet enjoyment of the unit;
• access to financial statements and the annual budget;
• the right to form and participate in a residents' committee;
• protection against unreasonable fee increases; and
• access to the Victorian Civil and Administrative Tribunal (VCAT) to resolve disputes.

A residents' committee, while not mandatory in every village, is one of the most effective safeguards available. A well-run committee can negotiate budgets with the operator, raise complaints collectively, and engage professional advisers on behalf of residents.

Village Rules

Every village has rules dealing with things like noise, visitors, pets, parking, use of common facilities, and sometimes lifestyle matters such as whether grandchildren can stay for extended periods. These rules are usually attached to the contract and form part of it.

Rules can be amended over time, but the Act requires proper consultation with residents and the residents' committee before changes are made. Prospective residents should review the current rules carefully and ask how often they have changed in recent years.

Selling or Exiting

A resident may leave a village for many reasons — downsizing again, moving closer to family, transitioning to aged care, or simply changing their mind. The departure process generally involves:

• giving formal notice to the operator;
• vacating the unit and returning the keys, often within a fixed period;
• an inspection and assessment of any refurbishment required to bring the unit back to a marketable standard;
• resale of the occupancy right to a new resident; and
• calculation of the resident's exit entitlement after deduction of the DMF, refurbishment costs and any outstanding charges.

Where a resident has died, the executor or legal personal representative steps in and deals with the operator on behalf of the estate. We discuss exits in more detail in our companion article on leaving a retirement village.

Family Considerations

Adult children and other family members are often heavily involved in a parent's decision to move into a village. Common practical issues include:

• Funding. Whether the entry contribution will exhaust the parent's savings, leaving little for future aged-care accommodation deposits.
• Inheritance expectations. The DMF and other exit charges will reduce what flows back into the estate, sometimes significantly.
• Capacity. Whether the parent has the legal capacity to enter into the contract, and whether an enduring power of attorney is in place to deal with future decisions.
• Estate planning. Whether the parent's Will and powers of attorney are up to date.

Families should be careful to support — not to drive — the decision. The contract is between the resident and the operator, and the resident's wishes and capacity must take precedence.

When Legal Advice Should Be Obtained

We recommend that prospective residents obtain independent legal advice at three key points:

• Before signing. A lawyer can review the disclosure statement, residence contract, service agreement and village rules, and explain the long-term financial impact of the DMF and other exit provisions.
• If circumstances change during residence. For example, when ongoing fees increase unusually, when rules are proposed for amendment, or when the resident loses capacity and an attorney needs to step in.
• At exit. Before signing any release or accepting an exit entitlement calculation, particularly where refurbishment charges or DMF deductions are contested.

Our retirement villages team acts for prospective residents, current residents and estates, in plain language and on a fixed-fee basis where possible. We work closely with the family's accountant and financial planner where required.

Related Reading

• What Should You Check Before Signing a Retirement Village Agreement?
• Leaving a Retirement Village: Understanding Exit Fees and Resident Rights
• Retirement Village Contracts Explained: Common Clauses and Common Mistakes
• Wills & Estate Planning

Frequently Asked Questions