Buying Into a Retirement Village in NSW: What Will It Cost and What Are Your Rights?
A retirement village contract is not like buying a house. You may not own your unit, and some fees keep running after you leave. Here’s what to check before you sign.
What does it cost to move into a retirement village in NSW, and what are your rights?
You pay to move in, you pay ongoing charges while you live there, and you usually pay a departure fee when you leave. Every retirement village contract in NSW must follow the standard form, and you get a 7 day cooling-off period and a 90 day settling-in period. The detail that matters most is in your contract, so have it reviewed before you sign.
- Do I own my unit? Only under strata, community or company title. Under a lease or a loan and licence, you buy the right to live there.
- What will I pay? An entry payment, ongoing recurrent charges, and usually a departure fee when you leave.
- Can I change my mind? Yes. You have 7 days after signing to cool off, unless you move in first.
- What if I move in and it’s not for me? Leave within 90 days and no departure fee applies. You pay fair rent, any damage and an admin fee of no more than $200.
- When should I see a conveyancer? Before you sign. You must get the contract at least 14 days before signing, which gives us time to review it.
Know what you’re buying
Your tenancy type decides what you own, what you pay when you leave, and how much say you have when your unit is sold.
| Tenancy type | What you get | Interest holder |
|---|---|---|
| Leasehold | A long lease from the operator (often 99 years), registered on title | Registered, if 50 years or more and you get at least 50% of any capital gain |
| Loan or licence | A right to live in the unit, usually with a non-profit operator | Non-registered |
| Strata or community title | You own the unit and join the owners corporation | Registered |
| Company title | Shares that give you the right to occupy a unit | Registered |
| Rental | A rental agreement, much like a private tenancy | Not applicable |
What buyers think
“It’s like buying a smaller house.”
“Once I’ve paid, my costs are done.”
“I’ll get my money back when I leave.”
What actually happens
Most village contracts sell you the right to live there, not the home itself. You keep paying recurrent charges while you live there, and a departure fee usually comes off what you get back. How much you receive, and when, depends entirely on your contract.
The documents you should receive
NSW law requires the operator to give you key documents before you sign. Read them all, and send them to your conveyancer.
General inquiry document
Given within 14 days of your first enquiry. It covers the village type, facilities, costs and any village rules.
Disclosure statement
Usually given once you find a unit. It includes the average resident comparison figure, which helps you compare total costs between villages.
The village contract
You must receive it at least 14 days before you sign. Operators must use the NSW standard contract, and extra terms can’t conflict with it.
Asset management plan
A 10 year plan for maintaining and replacing major items in the village, and who pays for them.
What it will cost
Village costs fall into three stages: moving in, living there and leaving. Leaving costs are the ones people most often underestimate.
| Stage | Cost | What to know |
|---|---|---|
| Before signing | Waiting list fee | Maximum $200, refunded within 14 days if you don’t move in |
| Before signing | Holding deposit on a unit | Fully refundable within 14 days if you change your mind |
| Moving in | Entry payment or purchase price | Set by the market |
| Moving in | Contract preparation | You pay no more than $50 |
| Moving in | Legal and conveyancing fees | Independent advice on your contract |
| Living there | Recurrent charges | Staff, security, insurance and common areas |
| Leaving | Departure fee | Often a percentage of your entry payment, growing the longer you stay |
| Leaving | Capital gain or loss share | Set by your contract |
| Leaving | Refurbishment and selling costs | Set by your contract and tenancy type |
Your cooling-off and settling-in rights
7 day cooling-off period. Either side can end the contract for any reason by written notice within 7 days of signing, and money paid is generally refunded in full. If you move in during that time, the cooling-off period ends immediately.
90 day settling-in period. If you move out for any reason within your first 90 days, no departure fee applies. You only pay fair market rent for the time you stayed, repairs for any damage beyond normal wear and tear, an admin fee of no more than $200, and the reasonable cost of any alterations you asked for.
Example
Margaret signs a village contract and moves in a week later. By week ten she realises she misses her old neighbourhood. Because she’s still inside her 90 day settling-in period, she can leave without paying a departure fee. She pays fair rent for ten weeks and a small admin fee, and her entry payment is refunded under her contract.
Questions to ask before you sign
- How is the departure fee worked out, and what is the maximum?
- How much have recurrent charges risen in recent years?
- Do I keep paying recurrent charges after I move out?
- Who keeps any capital gain, and who pays for refurbishment when I leave?
- What major repairs does the asset management plan show coming up?
- How is my unit sold or relet, and do I have a say in the price?
- What happens if I need to move into aged care?
What happens when you leave
What you get back, called your exit entitlement, is set by your contract. It is usually your entry payment, less the departure fee and agreed costs, plus or minus your share of any capital gain or loss. You can ask the operator for an estimate at any time. It is usually paid once your unit is resold or relet, and a former registered interest holder can apply to the Commissioner for Fair Trading for an exit entitlement order if payment takes too long.
Selling your home to move into a village?
Most people buying into a village are selling a home at the same time. Lining up both is where timing problems happen, so tell us early and we’ll manage the sale and the village contract together. Our seller questions guide covers the selling side step by step.
We review retirement village contracts for clients in Newcastle, Lake Macquarie, Port Stephens, Maitland and anywhere in NSW.
The short version
Moving into a retirement village means paying to move in, paying ongoing charges and usually paying a departure fee when you leave. You get the contract at least 14 days before signing, a 7 day cooling-off period and a 90 day settling-in period. Use that time to have the contract reviewed, because what you get back when you leave depends on it.
Thinking about a retirement village?
Talk to Justin, Julie, Amanda or Nicole before you sign. We’ll review your village contract and explain exactly what you’ll pay and what you’ll get back.
