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.

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 don’t.

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.

DMFs are typically calculated as a percentage of the initial purchase price of the resident’s unit and may be capped at a certain percentage or dollar amount. The percentage charged may vary depending on the specific retirement village and the terms of the resident’s contract.

This amount can be between 20 to 40 percent price and doesn’t necessarily take into account the additional capital gains charges which can be up 37.5 percent.

By charging a DMF, the operator can cover the cost of ongoing management and maintenance without charging residents higher monthly or quarterly fees.

It Pays for the Village Facilities & Amenities 

Retirement villages require significant ongoing management and maintenance, including facilities management, security, and staff salaries. DMFs help to cover these costs, ensuring that the village is well-maintained and providing a high level of service to residents.

These costs will also be dependent on the number and type of facilities as well as the number of homes.

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 shareholders 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.

Is There an Alternative to Paying 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.

LLCs (Land Lease Communities) like Living Gems have simple contracts – you purchase your own home and simply rent the land it is on. Our homeowners save many 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 high-quality resorts with delightful gardens and top-notch facilities is covered by the weekly site rental fee.

And, if you happen to 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.