The latest PwC Property Council Retirement Census stated the national average price of a two-bedroom ILU is $484,000.

When you think the average median house price in Australia is now $848,706, according to CoreLogic, that is a heavy discount. This is the Entry Fee you pay when entering a retirement village.

Ongoing fees for a two-bedroom Independent Living Unit, according to the PwC Property Council Retirement Census, have dropped to $502 per month. Bear in mind the water, energy and council rates a person pays at home.

These fees are, according to providers, for water rates, cleaning and maintaining common areas and amenities, care and upkeep of gardens, relevant village insurances, reasonable maintenance of fixtures and fittings in your apartment and monitoring the 24-hour emergency call and response system.

Annual increases in the fees (excluding the contributions to the Maintenance Reserve Fund applicable in QLD) are limited to CPI and external cost increases (e.g. council rates) unless approved by the residents.

Stamp duty

Retirement villages operate under a lease or licence, which means there is no stamp duty to pay.

The DMF

Often referred to as a departure fee or exit fee, the deferred management fee (DMF) is an amount that becomes payable when a resident permanently vacates their village unit. It is agreed before you enter the village and reduces the Entry Fee.

The deferred management fee gives a person the right to occupy their unit and enjoy the village amenities. It is calculated as a percentage of the entry fee that they paid when they moved into their unit.

The deferred management fee can vary significantly depending on your chosen provider, with some charging as much as 35% of the entry payment. Therefore, it pays to check this percentage with each village on your shortlist as well as clarifying whether the deferred management fee is capped.

The latest PwC Property Council Retirement Census found there are a variety of deferred payment structures reflecting a broad range of village standards, service offerings and financial arrangements tailored for residents. The 2021 Census shows that the maximum deferred payment percentage for 93% of villages is 36% or lower. The median maximum deferred payment percentage is 30% over 6 years.

The best thing is to take financial advice and take a look at the retirement villages in the local area or near where the family lives.   

Capital gain

Providers (67%) are shifting towards a deferred payment structures without capital gains share for residents, according to the PwC Property Council Retirement Census.

Be sure to check if capital gains are included in the contract signed before entering the village.