HomeHealthAged CareRetirement homes – right choice or a rip-off?

Retirement homes – right choice or a rip-off?

Among the many challenges facing Australians in our new post-COVID world is a critical housing shortage. House prices and rental rates continue to climb, and several property developers have gone bust, exacerbating the crisis further. Caught up in all this housing havoc is the subject of retirement homes. How has the retirement home industry been affected by the events of recent years and are they a good investment?

That’s a complicated question, but one industry player believes retirement homes could be a key to easing the housing crisis. The left-field suggestion comes from the Retirement Living Council (RLC).

RLC executive director Daniel Gannon said retirement communities were vital to achieving the Housing Australia Future Fund (HAFF) target. The HAFF aims to “improve housing outcomes for Australians” through the delivery of new social and affordable homes across Australia. 

That aim forms part of an overall target of 1.2 million new homes by 2029. “The prime minister’s … target is an admirably ambitious one,” Mr Gannon said. “But retirement communities can help achieve this lofty goal as Australia ages.” 

Mr Gannon is pushing for Prime Minister Anthony Albanese to count retirement units towards the government’s HAFF targets. Retirement units are officially recognised as dwellings by the Australian Bureau of Statistics.

Sounds practical, but are retirement homes a good investment?

A November 2023 RLC report, Better Housing for Better Health, highlights the economic savings and health benefits of retirement villages. In releasing the report, Mr Gannon said: “Retirement villages across Australia are already saving the government a billion dollars a year by delaying residents’ entry into aged care.” 

However, it must be noted that the RLC, part of the Property Council of Australia, represents the retirement home developers. Do retiree advocates agree with the RLC’s assessment?

Representing the other side of the equation, advocacy group National Seniors Australia (NSA) encourages a healthy dose of scepticism. In January, the NSA said investing in retirement housing was very much a case of “buyer beware”. It also discouraged the notion of retirement housing being an investment. Buyers (or their benefactors) will likely get less for their homes at tenure’s end than what they paid for them, it claims.

Just over year earlier, the NSA stated: “As a rule, we do not promote [retirement] villages as a suitable downsizing option.” The group acknowledged that retirement homes may provide a potentially comfortable lifestyle option, which is more suitable as people age. However, this potential was often unfulfilled because “the legislation has enabled practices … detrimental to the financial wellbeing of seniors”.

The NSA wants the federal government to enact nationally consistent and strengthened retirement village legislation. The current system, it says, is a mishmash of complex and inefficient state, territory, and local government laws. 

So what should potential buyers do?

Before making any decisions, the NSA suggests an old chestnut: “Seek independent financial and legal advice.”

This, of course, will come at a cost, but the NSA puts that into perspective: “The cost of good legal advice may be thousands of dollars. Some solicitors do charge up to $5000, and older people often decide against getting this advice because of the cost. But not doing so also could come at a very dear cost, much more than the legal advice.”

Ultimately, retirement home living may be a good option for you. But it may come at a significant cost. Obtaining the right advice could be your best chance of avoiding a retirement home rip-off.

Have you looked at the option of retirement home living? What have you learnt? Let us know via the comments section below. 

Also read: Retirement advice – how much are we willing to pay?

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Andrew Gigacz
Andrew Gigaczhttps://www.patreon.com/AndrewGigacz
Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


  1. As someone who knows first hand what a rip-off retirement villages can be, BUYER BEWARE is the best advice. Do your homework and research both sides of the subject.
    We moved into an apartment in an up-market retirement “village” in late 2014 and moved out in early 2020 (just over 5 years later) and ended up over $500.000 worse off than if we had remained in our own home.
    As soon as we signed and moved in were no longer ‘clients’ of the operator but simply ‘residents’ to be ripped-off as they pleased.
    Legal advice prior to moving in was to no avail as in the operator’s words “we have 5 lawyers to your one”!
    A recent SA Retirement Villages Act review concluded that “residents of retirement villages are generally not afforded the same level of protections as residents under the Residential Tenancies Act.
    Thus, BUYER BEWARE!!!

  2. Retirement villages are a ripoff as we have found out. You pay $800,000 and lose up to 30% in deferred management fees when you die or leave. In addition you get none of the capital gain on the apartment/villa. So after maybe 10 years the developer sells the apartment/villa for $1.5million and you get nothing of that gain and have also lost 30% on the original capital. So if you wanted to leave and move closer to family you have lost too much equity, maybe as much as $800,000 to find for a new place. A total rip-off for the benefit of living in a nice social environment. My advice is do your sums!

    • Yes, we thought we were moving into a nice social environment. However it turned out to be toxic: spiteful cliques, cruel gossip and a Residents’ Committee composed of management sycophants. Honest residents wouldn’t stand for the Residents’ Committee because they would be punished. From the time we left up to now, the whole situation has become progressively worse and more expensive.

    • Well you didn’t do your homework…we live a village that has no deferred management fee & we get all capital gains when we sell.
      We hve very energy efficient houses, all have solar panels & our power bills are much less than our old home.
      It’s completely secure when we travel & is very popular with self funded retires & somecare still working.

      • Susan, sounds like your village operator is one of the few that do the right thing. After all, the Retirement Villages Act should protect seniors/retirees from being ripped-off but, unfortunately, unscrupulous operators seem to be able to get away with rip-offs.
        Can you say which village you live in?

  3. You have to be aware that moving into a Retirement Village is a lifestyle decision not a property investment decision. Your return on investment capital will be negative but the villages offer enjoyable social outcomes and mostly very comfortable, easy to live in houses.

  4. Read the retirement village contract, some have 50/50 profit sharing, they charge for every day you are there on a sliding scale up 32% after 5 years tenancy, also charge 50% real estate commission for resale even though the village had its own sales office in the complex, then refurbishment fees, and 50% ongoing maintenance fees until your unit is sold. I lived in a for-profit village for nearly 6 years, my $400.000 apartment was sold for $474,000, I received $272,000. Not enough to buy much else.
    As I said, read the contract, there are so many variations depending on the village and even within villages they keep changing for new tenants.
    If you stay there until you die that’s better, if you leave to go into care not so much if you need money for that, otherwise it’s your inheritors who get a bit less but what you bought was a lifestyle not an investment property.

  5. I have lived in two “lifestyle villages”, the first one taking 16% after 4 years tenancy, however, I still had well and truly enough to buy into another lifestyle village but without all the “fancy services like pools, spas, tennis courts etc”, which I didn’t use anyway. This village has no exit fees, has lovely gardens, a community vegetable garden, and wonderful neighbours. I absolutely love it here. The fees are very reasonable as we do not own the land and my dog loves it as well. If you are looking at moving into a “lifestyle village” not a “retirement village”, the people are younger and there are more things to do as well. But do look into the fees and exit fees, there are still places around that do not charge exit fees.

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