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If you have reached 55+ years and are considering downsizing, then the idea of relocating to a retirement or lifestyle village may have crossed your mind.  Shane examines whether you should choose a granny flat or retirement village!

Retirement villages operate from a variety of different business models from freehold, leasehold, rental, or deferred management fee structures. Getting your head around their differences is hard work in itself, but just wait till you start talking contracts and fees!

As retirement villages vary greatly in the types of accommodation and services provided, the Department of Commerce advises potential buyers to carefully consider how much you can afford to pay.  Once you start weighing up all the costs it may not be the best financial decision for you.

When talking about fees, there’s typically three stages in the life cycle of a retirement village; in-going costs, recurrent charges and exit fees.


In going costs may include:

  • Expression of Interest – a fee you may have to pay to hold or reserve the unit you are interested in buying or leasing
  • Deposit – a larger sum or money payable to secure the unit you are buying or leasing
  • In-going Contribution – the amount payable under the contract to purchase or secure the right to reside in the village.  This is a one-off upfront payment which can range from a nominal amount up to the total value of the premises.

Recurrent charges are ongoing charges you pay on a regular basis while living in the village.  They generally cover operating costs and services that are for the benefit of all residents.

These may include village administration, property maintenance, gardens and grounds keeping, insurance, security, pool, gym, communal facilities and more. Obviously the greater the services and facilities available, the higher this fee is likely to be. These charges are not regulated and may increase while you live in the village.

On top of this you may have to pay levies into a sinking fund of reserve for capital maintenance and replacement.


On your departure from the village to higher care living or your own granny flat, some of the exit fees that may be applicable include:

  • Recurrent charges – Under some contracts you can continue to be liable for the ongoing charges for up to six months after you vacate unless a new resident takes over the payments sooner.
  • Refurbishment costs – You may be obliged to fund a renovation or refurbishment on the premises when you vacate.
  • Sales commissions and marketing costs – You may be obliged to engage the village operator (at a premium) for the sale and marketing of your premises.
  • Deferred management fee – can be very complicated, but is usually a fee charged for each year of occupancy and calculated as a percentage of the original purchase price or re-sale price. This can often around 30% equating to more $100,000.
  • Capital gain – You may be obliged to share (or forfeit entirely) any capital gains from the unit’s sale with the village operator.  This is usually in addition to the deferred management fee.
  • Maintenance reserve fund – Some contracts oblige departing residents to pay a percentage of their original purchase price or re-sale price in to a maintenance reserve fund.  This contributes towards a kitty used to fund upgrade works.

All of these fees are usually deducted from the sale of the unit.  So if your unit sits on the market for an extended period of time you may be waiting a while to receive your entitlements.  Not to mention that once all of these fees have been deducted from the sale price, there may not be much left over for you or your family!

Contact the team at Perth Granny Flat Specialist today – (08) 9284 7778


We work with you to build you a superior quality granny flat that is built to your budget, on time and defect free. Our clients get to stay informed every step of the way and can sleep well at night knowing that they are being looked after by professionals who genuinely care.


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