Deferred management fees and capital gains fees are contentious topics that surround retirement villages, with many over-50s downsizers feeling like they’re getting a raw deal from retirement village operators. 

A news feature on ABC News in October 2024 shone a spotlight on the issue, featuring interviews with homeowners, their families, and industry experts. The big concern? Complicated contracts, hidden costs, and fees that can eat into the money retirees expect to get back when they sell. 

What are Deferred Management Fees (DMFs)? 

DMFs and other hidden costs are often marketed as a way for retirement village operators to recoup costs when the property is sold. That money supposedly goes towards maintaining and upgrading the facilities. But critics argue that these fees can be a real sting in the tail. The complex formulas used to calculate them are based on how long someone has lived in the village, and they can be as high as 35 percent of the sale price—meaning a big chunk of money goes straight to the retirement village when a home is sold. 

How much can it cost? 

Let’s break it down with an example: 

• You buy a retirement village unit for $500,000. 

• Three years later, you sell it. 

• The village operator charges a 35 percent deferred management fee—that’s $175,000 straight off the top. 

• That leaves you with $325,000, minus any selling costs. 

Now, if the village also charges a capital gains fee, the numbers change again: 

• You buy a retirement village home for $500,000 and sell for $550,000 three years later. 

• The village operator takes 50 percent of the capital gain—that’s another $25,000 gone. 

• The 35 percent deferred management fee is now calculated on $525,000 (the original price plus half the capital gain). 

• That means the operator walks away with $183,750, and you get $366,250, minus selling fees. 

It’s no wonder people are questioning whether they’re getting a fair go! 

Should DMFs be scrapped? 

National Seniors Australia, an advocacy group for older Australians, is pushing for DMFs to be banned for new retirement villages altogether. 

Anthony Puljich, CEO of Living Gems, says there’s a better way. Retirement villages differ from a lifestyle resort; lifestyle resorts, like Living Gems, operate on a land lease model. A model that is simpler and is financially clearer and more transparent.  

“At Living Gems, we don’t charge deferred management fees or capital gains fees, and on top of that, our contracts are much simpler,” Anthony explained. “There’s just one contract to buy your home and another for the weekly site rental.” 

The simpler setup also makes it easier for retirees to budget, including planning for future healthcare needs. Plus, because homeowners rent the land their house is on, they don’t pay stamp duty. Pensioners and veterans who qualify can also receive rental assistance, helping to lower costs even further. 

Read more about DMFs and how Living Gems make it financially better for homeowners of lifestyle resorts with no DMFs. 

Financial peace of mind. 

Living Gems makes financial sense — plain and simple. 

You own your home, which means: 

• No stamp duty 

• No deferred management fees, and 

• 100 percent of any capital gains go straight to you 

Our weekly site fees cover access and maintenance of the resort facilities, gardens and all the good stuff — like the gym, pool, cinema and a terrific social life — saving you the cost of memberships, entertainment, and more. That’s smart living! 

A better way to downsize? 

Living Gems resorts are built for active, independent over 50s who want a modern, low-maintenance home in a lifestyle community with resort-style facilities—think high-end pools, gyms, and Country Clubs.

For many downsizers, avoiding hidden fees and complex contracts makes all the difference in having a stress-free retirement.  

Want to crunch the numbers yourself? You can check out the Queensland Government’s guide to retirement village fees here.