Retirement village exit fees, untangled

An exit fee is an amount paid to the village operator when a resident’s contract ends. Queensland law calls it an exit fee. NSW law calls it a departure fee. Most of the industry calls it a deferred management fee, or DMF. They all mean much the same thing.

“Deferred” is the key word. Under most contracts, the fee isn’t paid while someone lives in the village. It builds up quietly in the background, and it’s usually paid from the money that comes back when the home is resold or the contract ends.

It isn’t a penalty for leaving, and it isn’t a hidden charge. It’s simply one of the three parts of most village contracts: the money going in (the entry payment), the money each week (the ongoing fees) and the money going out (the exit fee and any other costs on leaving). Knowing the exit fee in dollars is one of the most useful things anyone can do before signing.

Villages need to cover their running costs and earn a return on the land and buildings. The weekly fee covers running the village. In Queensland, the law requires that fee to go into a separate fund that can only be used to provide the village’s general services. So the operator’s return has to come from elsewhere, and under most contracts that’s mainly the exit fee, and sometimes a share of any rise in the home’s value.

The trade-off for the resident is usually a lower entry price. In the industry’s 2025 census, the average two-bedroom village unit cost around 61% of the median house price nationally, though that varies a lot from area to area. Paying less to get in can leave more money free while living there: for travel, help at home, family, or a buffer for later.

So the exit fee is really a choice about timing. Pay less now and more later, or, where a village offers it, pay more now and less later. Neither is right or wrong. What matters is seeing the full cost over the years someone might live there, in dollars.

Most exit fees are a percentage that grows with each year of living there, until it reaches a maximum, called the cap. In many contracts the percentage builds faster in the early years and then slows or stops. That’s usual practice, not a rule: the exact pattern is in each contract.

Industry figures give a sense of what’s typical. In the 2025 industry census, the average maximum was about a third (33%) of the price it’s worked out on. In the 2023 census, about two-thirds of operators said their usual contracts reach the cap within six years, and nearly all within ten. Neither Queensland nor NSW law sets a cap on the fee itself.

The law does set some rules on how it’s counted. In Queensland, a time-based exit fee must be worked out on a daily basis (some older contracts can say otherwise), so leaving partway through a year means paying for the days lived there, not a whole extra year. In NSW, the departure fee is also worked out by the day, and it stops building once the resident has permanently left.

Here’s a made-up example to show the shape, not a typical contract. Say a fee builds by 10% a year for the first three years, then 2.5% a year after that, to a cap of 35%. After one year it would be 10%. After three years, 30%. After five years, it would reach the 35% cap and stay there.

• How much the fee grows each year, and whether it’s faster early on
• The cap, and how many years it takes to reach it
• Whether it’s worked out on the entry price or the resale price
• What else comes off the money paid back, such as selling costs or repairs
• Whether any other payment options are offered

The percentage has to be applied to something. More often it’s the entry price, the amount paid to move in. In about a third of new contracts in 2025 (36%), it was the resale price, the amount the next resident pays.

The difference can be large. Take a made-up home with a $500,000 entry price and a 30% exit fee. On the entry price, the fee is $150,000. If the home later resells for $600,000 and the fee is worked out on the resale price, it’s $180,000. If prices fall, a resale-price fee falls too.

Capital gain is a separate question that sits alongside this. Depending on the contract, any rise in the home’s value may go to the resident, be shared, or go to the operator, and some contracts share a fall in value too. In the 2025 industry census, the most common contract structure gave residents no separate share of any gain. The exit fee and the gain share together decide what comes back.

Nobody needs to work this out alone or take anyone’s word for it. Both states require operators to put the exit fee in writing before anyone signs, in a set format.

In Queensland, every village has a Village Comparison Document, on its website and given within 7 days of asking. It must explain when the exit fee is paid, how it’s worked out, and its highest and lowest amounts. It must also describe any other financial option or model for paying, such as paying part of the fee up front. Once someone shows interest in a particular home, the operator must give a Prospective Costs Document for that home. It estimates the exit fee after 1, 2, 5 and 10 years, its lowest and highest amounts, and the operator’s estimate of the money paid back after 1, 2, 5 and 10 years. Both documents must be given at least 21 days before signing; that time can only be shortened with a signed waiver and a Queensland lawyer’s advice. Later on, a resident thinking about leaving can ask in writing for an estimate of their exit entitlement, and the operator must give it within 14 days.

In NSW, the village must give a general inquiry document early on, within 14 days of knowing someone is interested. The disclosure statement and the contract must be given at least 14 days before signing. The disclosure statement shows whether the departure fee is worked out on the entry price or the next resident’s price, the percentage for each year, any other exit fees, and the share of any capital gain or loss. It also shows an average resident comparison figure: one monthly number that combines seven years of weekly fees with the departure fee after seven years and the operator’s share of any gain, to help compare villages. Once living there, a resident can ask in writing, once a year, for a meeting where the operator must give a written estimate of the departure fee and what would come back on leaving.

The classic “pay later” exit fee is still the most common, but it isn’t the only model. Some villages offer contract choices. These vary from village to village and are set by the contract, not by law.

Choices can include paying some or all of the management fee up front, with a lower or no exit fee later. Some offer a higher entry price in exchange for a lower exit fee. Some offer a refundable option, where the entry price is higher and the full amount, or most of it, comes back on leaving. Some villages also rent homes, with no entry payment or exit fee. In the 2025 industry census, up-front options made up about 8% of new contracts and rentals about 5%.

Which works out cheaper depends mostly on how long someone stays, and nobody knows that in advance. An up-front payment also means more money committed on day one and less left free. The size of the entry payment can also affect the Age Pension and Rent Assistance. The Financial Information Service at Services Australia (132 300) is free and can explain how different amounts might affect payments.

NSW law gives new residents a settling-in period. If a resident permanently leaves within 90 days of moving in, no departure fee applies. Instead, the resident pays a fair market rent for the time they lived there, plus some limited costs: repairing damage beyond fair wear and tear, an administration fee of no more than $200, and reasonable costs of any changes made at the resident’s request. This is separate from the NSW cooling-off period, which is 7 business days after signing and ends early if the resident moves in.

Queensland law has no settling-in period of this kind. There’s a 14-day cooling-off period after signing. After that, a resident can end the contract, but the usual exit terms, including the exit fee built up so far, apply. Some Queensland villages offer their own trial or settling-in period. If one is offered, the Village Comparison Document must give its length, conditions and costs.

Because many fees build faster in the early years, and the cap is often reached within a few years, a short stay usually costs much more for each year lived there than a long one. Spread over ten years, a capped fee might work out at a few per cent a year. Over two years, it can be many times that.

Nobody can know how long they’ll stay. Health changes, a partner’s needs change, or family moves. So it helps to look at the whole range in the documents, not just the 10-year figure. What would the exit fee and the money coming back be after 2 years? After 5? Is that a cost that feels fair for the life the village offers?

Think about what could come next, too. A retirement village isn’t aged care. If care needs grow, moving into an aged care home is a separate step under a different law, the Aged Care Act 2024, with its own assessment, contract and fees. A home next door, or on the same site, doesn’t guarantee a place, and the village exit terms still apply when leaving the village. The rules on when the money must be paid back matter here. In Queensland, it’s generally due within 18 months of leaving at the latest. In NSW, on loan, licence and shorter-lease contracts, it’s due within 6 months of handing back the home at the latest.

Staying at home is a full answer too. It can help to set the village figures beside the real cost of staying put, including repairs, help around the house and the things that are hard to put a price on, such as company.

• The exit fee in dollars after 1, 2, 5 and 10 years
• What would come back at each point, after all costs
• The weekly fees over the same years
• Any up-front, refundable or rental options, in dollars
• The latest date the money must be paid back
• The same years in your current home, for comparison