Why Retirement Villages Charge Deferred Management Fees (& Why We Don’t)

Selling your home is stressful enough, but when you’re hit with extra hidden and deferred management fees to deal with, it can quickly turn into a financial mess and take a hit on your retirement savings. 

Protecting your finances is crucial when you sign a contract, so it’s important to understand what you’re getting into before you decide on a retirement village. 

Here, we’ll break down what deferred management fees are, why retirement villages charge them and why alternative retirement living options like land lease communities don’t. 

What Are Deferred Management Fees? 

Deferred management fees (DMF) are exit charges that are imposed on a seller when leaving a retirement village. Charged annually but usually deferred until exit, it is typically calculated as a percentage of your original purchase price or resale value and capped around 25-35% after three years. Ensure you read the contract and terms and conditions clearly when you’re looking at retirement villages. 

Why Do Retirement Villages Charge Deferred Management Fees? 

Retirement villages in Australia charge deferred management fees (DMFs) to cover the cost of managing and maintaining a village’s facilities and infrastructure. It also covers the cost of providing ongoing services such as maintenance, security and staff salaries. This concept was introduced to Australia in the 1980s with the rise of the first generation of ‘for-profit’ retirement villages as a way for operators recoup capital costs and to pay shareholders. 

It Reimburses the Retirement Village  

Deferred management fees are used to provide financial stability for the retirement village operator, helping to ensure that the village can continue to operate over the long term. This can be particularly important for not-for-profit operators. In the case of ‘for-profit’ operators, this fee might also be used to fund a shareholder’s dividend. 

Again, no two retirement villages are the same, so it is important not to make assumptions about these fees and to do your homework before you sign any contract. 

Are there other alternative housing options that don’t charge deferred management fees? 

Yes, there are retirement living options that provide an alternative to paying deferred management fees, one that offers a straightforward contract with complete transparency up front, like Living Gems. Land lease communities (LLCs) like Living Gems have simple contracts – you purchase your own home and rent the land it is on. Homeowners have the peace of mind that their legal right to occupy their land, as per their site agreement, is protected under the Queensland Government’s Manufactured Homes (Residential Parks) Act 2003. 

Also known as lifestyle communities, Living Gems homeowners save thousands of dollars because: 

• They don’t pay stamp duty on the purchase 

• They save on the cost of the land 

• There are absolutely no exit fees and no hidden charges 

• You keep 100 percent of all capital gains 

• The running and maintenance of the resort is via a modest weekly site rental fee. 

Why Don’t Living Gems Charge Deferred Management Fees?  

Quite simply, we don’t believe there is a need for deferred management fees. When you purchase your beautifully designed home, you deserve to keep all the capital gains. The care of our resorts with delightful gardens and premium facilities is covered by the weekly site rental fee. 

And, if you qualify for an Australian seniors’ pension or Department of Veterans’ Affairs card, you may be eligible for rental assistance that further reduces the amount. 

What Does the Living Gems Difference Look Like? 

Don’t just take our word for it, see the difference for yourself:

Think About Retirement a Little Differently with Living Gems  

Nobody likes dealing with deferred management fees, but with Living Gems you don’t have to. If you’re an active over-50, we encourage you to look at the simply lifechanging Living Gems resorts. 

Our architect designed homes have been especially designed for modern, active living with high-quality features included as standard. Enjoy resort-style living tucked away in Australia’s best locations, with all the active-living features that you’re looking for, including a Country Club, gym, pool, spa, sauna, and sports facilities. 

Contact us today to find out more.