If you’re considering moving into a retirement village, you’ve probably come across the term Deferred Management Fee (DMF) – sometimes called an exit fee. But what is it exactly, and how does it compare to other retirement living models like land lease communities?

Recent headlines have brought the DMF model back into focus. Victorian land lease operator Lifestyle Communities, which is listed on the ASX, is appealing a legal ruling over its contracts that include DMF-style fees. The decision, handed down by VCAT President Justice Ted Woodward, relates to how such fees are treated under Victoria’s Residential Tenancies Act 1997.

So, what does this mean for you as a future resident?

One size doesn’t fit all

According to Daniel Gannon, Executive Director of the Retirement Living Council, the housing choices available to older Australians are diverse – and so are the legal rules that govern them.

“When it comes to rightsizing, it’s not a one-size-fits-all decision,” Daniel said.

“There are different contracts, obligations, costs and consumer protections – and it’s important that people understand the differences.”

Retirement villages, for instance, operate under specific state-based Retirement Villages Acts, which balance consumer protections with the financial sustainability of village operators. On the other hand, land lease communities follow tenancy-based legislation, which can have different rules around fees, rights, and obligations.

What is the DMF – and why is it used?

The Deferred Management Fee is a common feature in retirement villages across Australia. It’s a fee that’s typically paid when you leave the village, not when you move in. It helps cover the ongoing costs of maintaining the village and allows operators to offer more affordable entry prices.

“The DMF model allows for lower upfront costs and greater flexibility in ongoing fees,” Daniel explains.

“This means you can free up equity from your home to enjoy your retirement, while still living in a safe, community-focused environment.”

In fact, the Retirement Living Council’s latest census shows that 55% of retirement village operators offer multiple contract types, and 30% offer an upfront payment model – giving residents more choice and flexibility.

Importantly, the DMF model is enshrined in legislation that specifically applies to retirement villages – unlike land lease communities, where its use is now being tested.

Why it matters

This legal challenge in Victoria highlights why it’s so important to read and understand your contract, no matter which type of community you’re moving into. Contracts can vary widely – and so can your financial obligations, rights, and exit conditions.

“Our advice to anyone considering a move into a seniors’ community is simple,” Daniel said.

“Take your time, read the contract carefully, understand your obligations, and always obtain independent financial and legal advice.”

Still confused about the DMF?

What is a DMF? Understanding your Deferred Management Fee – villages.com.au

Watch this helpful explainer video from DCM Group CEO Chris Baynes:

▶ What is the DMF? | Watch on YouTube

Or explore more guides on Villages.com.au to compare housing options, costs and contract types — so you can make the decision that’s right for you.