Tuesday, September 22, 2026

How Victorian Retirement Village Residents are Overcharged

Did Consumer Affairs Victoria misinterpret the law - Did village residents pay more in fees than required by law - Who will repay the $100m to residents - Who will be held accountable.

A statement on the Consumer Affairs Victoria website can mislead retirement village residents into paying a substantially higher maintenance charge than they are statutorily obliged to pay. The statement reads:

“A retirement village can only increase the amount of their maintenance charge annually in accordance with increases in the consumer price index (CPI).”

It continues:

“A bigger increase is only allowed if it is approved by a special resolution passed at a meeting of residents.”

The statement misleads residents into a belief that the only control on increasing their fees is whether an increase exceeds CPI, operators rely on this to obtain a maintenance charge greater than the adjusted maintenance charge calculated under the Act, without resident authority.

The underlying issue is the proper construction and function of the expression “adjusted maintenance charge” in the Retirement Villages Act 1986 (Vic) (“the Act”), particularly ss 38 and 38AA. That construction is set out below.

The question is whether the adjusted maintenance charge is:

  • itself the recurring charge payable by residents as claimed in Parliament by the then Minister, Ms Shing; or
  • a statutory amount calculated under s 38AA which operates to regulate and limit the amount of the separate “maintenance charge” that an operator may require residents to pay.

For the reasons set out below, it is the latter when the relevant provisions are read together. The central textual support for this view is s 38AA(2)(i), which is address at paragraph 3 below.

1. The Act expressly defines “maintenance charge” as a charge payable by a resident

Section 3C(1) provides that “maintenance charge” means a recurring charge payable by a resident under the relevant retirement village contract:

  • for the provision of goods or services (other than optional services) by the operator; or
  • to contribute to the costs of managing the retirement village, including employment, maintaining facilities and capital maintenance.

Section 3(1) further provides that “maintenance charge” has the meaning given by s 3C. Parliament has therefore expressly identified the “maintenance charge” as the recurring financial liability of the resident, with a substantive meaning independent of the calculation contained in s 38AA.

2. Section 38AA prescribes a formula for calculating a different statutory amount – it does not define the maintenance charge

Section 38AA is headed “Formula for calculation of adjusted maintenance charge”. Section 38AA(1) provides that the adjusted maintenance charge for a relevant financial year must be determined in accordance with subsection (2), which in turn requires the adjusted maintenance charge to be determined in accordance with a formula.

The critical provision is s 38AA(2)(i), which provides that the variable “A” in the formula is “subject to subparagraph (ii), the adjusted maintenance charge for the previous relevant financial year for the village.”

This wording is significant. For an existing retirement village, Parliament did not identify “A” as:

  • the maintenance charge payable in the previous year;
  • the actual amount collected from residents in the previous year; or
  • the costs incurred by the operator in the previous year.

Instead, Parliament expressly selected the previous year’s adjusted maintenance charge as the starting point. That creates a statutory chain – previous adjusted maintenance charge → statutory formula → current adjusted maintenance charge – and so establishes a rolling statutory calculation.

3. Section 38AA(2)(i) expressly distinguishes “adjusted maintenance charge” from “maintenance charge”

The distinction becomes particularly clear when s 38AA(2)(i) is read together with s 38AA(2)(ii). Subparagraph (i) applies to an existing village and uses “the adjusted maintenance charge for the previous relevant financial year.” Subparagraph (ii), by contrast, deals with a new retirement village that has operated for only one relevant financial year, and substitutes “the maintenance charge for that relevant financial year.”

Parliament has therefore deliberately used two different expressions – “adjusted maintenance charge” and “maintenance charge” – and that difference cannot readily be dismissed as accidental.

For a new village, there is no previous adjusted maintenance charge from which to calculate the statutory amount, so Parliament uses the actual maintenance charge as the initial figure. Once that initial figure exists, however, the Act moves to the rolling mechanism in s 38AA(2)(i), under which the previous adjusted maintenance charge – not the previous actual maintenance charge – becomes the basis for the next calculation.

This is powerful textual evidence that the adjusted maintenance charge is a statutory calculated amount which regulates the maintenance charge, rather than merely being another name for whatever amount the operator happens to charge residents.

4. Section 38 confirms that the two expressions perform different functions

Section 38(2) provides, in substance, that an operator must not request or require a resident to pay a maintenance charge that is greater than the adjusted maintenance charge, subject to the statutory exceptions. The provision is framed as a comparison – maintenance charge exceeding adjusted maintenance charge – which is the circumstance triggering the statutory prohibition.

The prohibition is not expressed as “an operator must not require a resident to pay an adjusted maintenance charge greater than …”, nor does it say “the adjusted maintenance charge is the maintenance charge payable by the resident.” Instead, it establishes a comparison between the two: the maintenance charge must not exceed the adjusted maintenance charge. The natural operation of that provision is therefore to make the adjusted maintenance charge the statutory controlling amount against which the actual maintenance charge is measured.

5. Section 38(4) reinforces the distinction

Section 38(4) provides that the payment of a maintenance charge that is greater than the adjusted maintenance charge may be approved by a special resolution of residents. Again, Parliament has distinguished the payment of the maintenance charge from the adjusted maintenance charge against which that payment is measured. The statutory scheme is therefore capable of operating as follows:

Maintenance charge = the recurring charge payable by the resident under s 3C

Adjusted maintenance charge = the amount calculated under s 38AA

Section 38 = the provision which ordinarily prevents the first amount from exceeding the second

6. The function of s 38AA is regulatory, not merely an accounting exercise

The better construction is that s 38AA establishes a statutory ceiling or control mechanism. It does not merely provide an internal accounting calculation of no legal consequence, nor does it create a second fee payable by residents. Its legal function is to determine the amount above which the operator ordinarily cannot require residents to pay a maintenance charge.

Put simply: s 3C identifies what constitutes a maintenance charge; s 38AA determines the statutory adjusted amount; and s 38 regulates the relationship between the two. That construction gives each provision a separate and coherent function.

7. The construction is supported by the structure of the formula

The operation of s 38AA(2)(i) would be difficult to explain if “adjusted maintenance charge” simply meant the actual amount residents paid.

If that were the intention, the logical formula for an existing village would be to take the previous year's maintenance charge and adjust it.

Instead, apart from year 2 Parliament requires the calculation to begin with the previous year's adjusted maintenance charge.

Consequently, s38AA creates a self-perpetuating statutory control figure. For example:

In year 2 the operator's proposed maintenance charge is $108,000. The s38AA adjusted maintenance charge is $103,000. The two figures are not identical; the latter establishes the statutory upper limit of $103,000. Residents have the right under s38(4) to choose which of the two values to pay, $108,000 or $103,000.

In year 2, the operator let residents vote on which of the two fees to pay, but for the wrong reason. A vote based on CAV's plain-English explanation where an increase is higher than CPI, overlooking the statutory provisions of Section 38(2) and subsequently s38(4).

In year 3 the operator’s proposed maintenance charge is $110,160. The s38AA adjusted maintenance charge is $105,060. The two figures are not identical; the latter establishes the statutory upper limit of $105,060. Residents have the right under s38(2) and subsequently s38(4) to choose to not to pay $110,160.

In year 3, the residents right to a vote was denied under CAV's plain-English explanation that the increase was no greater than CPI, ignoring the 38(2) protection for residents in that they are not required to pay a maintenance charge greater than the statutory upper limit of $105,060.

8. The purpose of the Act supports this construction

Section 1 states that the purpose of the Act is to clarify and protect the rights of persons who live in, or wish to live in, retirement villages. The interpretation of Victorian legislation is also governed by s 35 of the Interpretation of Legislation Act 1984 (Vic), which requires a construction promoting the purpose or object underlying the Act to be preferred, and permits consideration of parliamentary proceedings and explanatory material.

The construction advanced here provides residents with a coherent statutory protection: the operator identifies the maintenance charge falling within s 3C; the statutory formula establishes the adjusted maintenance charge; s 38 ordinarily prevents the operator from requiring residents to pay a maintenance charge exceeding that amount; and an increase beyond that amount requires the statutory approval mechanism or must fall within an express exception. That construction gives practical effect to the protective purpose of the Act.

9. The parliamentary debate does not displace the statutory text

I acknowledge that, during the passage of the 2025 amendments, the Minister at the time stated that:

“The adjusted maintenance charge is not [a] benchmark. It is an actual maintenance charge payable by residents …”

The Government opposed an amendment which would have replaced “adjusted maintenance charge” with “benchmark maintenance charge”. I raise that statement because it is likely to be relied upon in support of the first construction. However, it does not, in my submission, answer the statutory construction question, and the statutory text itself remains primary.

More importantly, the Minister’s statement does not alter the fact that s 38AA(2)(i) expressly defines the starting point for the annual calculation as the previous adjusted maintenance charge, while s 38(2) expressly prohibits a resident being required to pay a maintenance charge greater than the adjusted maintenance charge. Those provisions continue to distinguish the two concepts.

The parliamentary statement may support the proposition that the adjusted maintenance charge can be the amount actually payable where the operator’s maintenance charge is set at that amount. It does not, however, establish that the two expressions are legally synonymous. Indeed, the proposed amendment is itself revealing: the fact that Parliament was asked to replace “adjusted” with “benchmark” demonstrates that the terminology was recognised as potentially confusing. The amendment was rejected, but rejection of a proposed amendment does not itself amend the operative text or eliminate the textual distinction between the two expressions.

10. The practical consequence

The consequence of the preferred construction is that an operator cannot simply treat any amount it chooses to charge residents as the “adjusted maintenance charge”. The starting point must be the statutory scheme: first, identify the maintenance charge within s 3C; second, calculate the adjusted maintenance charge strictly in accordance with s 38AA; and third, apply s 38 to determine whether the proposed maintenance charge exceeds the statutory amount.

The adjusted maintenance charge cannot properly be used as a device to redefine what constitutes the underlying maintenance charge. Conversely, an operator cannot avoid the statutory limitation by characterising an amount as part of the “adjusted maintenance charge” when that amount has not been determined in accordance with s 38AA.

11. The particular significance of s 38AA(2)(i)

The central submission of this letter is that s 38AA(2)(i) is inconsistent with the proposition that the adjusted maintenance charge is simply the actual maintenance charge payable by residents. For an established village, the statutory formula does not take the previous year’s actual maintenance charge as its starting point – it takes the previous year’s adjusted maintenance charge. The Act therefore establishes a distinct statutory figure which is carried forward from year to year, and the fact that the figure may ultimately become the amount actually charged to residents does not alter its statutory function.

The distinction is analogous to a statutory maximum: the fact that a person may lawfully be charged the maximum amount does not mean that the maximum itself is necessarily the same legal concept as the underlying charge.

12. Conclusion

For the reasons given above, the proper construction of ss 3C, 38 and 38AA is as follows:

  • “maintenance charge” is the recurring charge payable by the resident as defined in s 3C;
  • “adjusted maintenance charge” is the amount determined under the statutory formula in s 38AA;
  • for an existing village, s 38AA(2)(i) requires the calculation to commence from the previous year’s adjusted maintenance charge, not the previous year’s actual maintenance charge;
  • s 38(2) establishes the ordinary statutory prohibition against requiring a resident to pay a maintenance charge greater than the adjusted maintenance charge;
  • consequently, the adjusted maintenance charge performs the function of a statutory controlling amount, or ceiling, for the maintenance charge; and
  • it should not be treated as a separate fee payable by residents, nor used to enlarge or redefine the underlying maintenance charge contrary to s 3C.

In short, the adjusted maintenance charge and the maintenance charge are distinct statutory concepts, and s 38AA calculates the former for the purpose of regulating the latter.

13. The Consumer Affairs Victoria website statement should be corrected

Returning to the website statement: on the construction set out above, it is materially incomplete, and contended misleading. By telling residents that an operator “can only increase” the maintenance charge in line with CPI, or with a special resolution, the statement omits the separate and more fundamental statutory constraint in s 38(2) – namely, that the maintenance charge must not exceed the adjusted maintenance charge calculated under s 38AA, regardless of whether the proposed increase happens to track CPI.

An operator can point to this statement and suggest that any increase in line with CPI is lawful, when in fact the statutory ceiling is the adjusted maintenance charge, which may be lower.

To ensure full protection and rights under s38(2) and s38(4) for an already vulnerable cohort, Consumer Affairs Victoria must revise their website statement to accurately reflect the provisions of s38 and s38AA, including the s38AA adjusted maintenance charge as the statutory ceiling.

Wednesday, September 16, 2026

Retirement Villages $100m Problem

Potential gap between what retirement village operators charge residents and the actual cost could hit retirees for up to $138 million, retiree rights advocate writes.

Residents at retirement villages operating under Victoria’s Retirement Villages Act 1986 (RV Act) are being charged more for village maintenance and management — the service charge — than what the law requires.

This occurs where operators deny residents the statutory right to choose to pay a service charge from two separate values — the service charge as proposed by the operator, or an independently calculated benchmark value.

According to the legislation, residents are not required to pay a monthly service charge higher than this independently calculated, CPI-compounding benchmark value — unless the residents agree to do so (except for the first year. The service charge is based on the operator’s estimated operating costs for maintenance and management of the village for the new village year; the benchmark value compounds each year using the % change in the Australian Bureau of Statistics Table 9 Melbourne CPI index.

See the full story at the link below - 

Retirement villages. The $100 million bureaucratic jumble

Sunday, July 26, 2026

Victorian Retirement Village Residents Misled

How the statement by Consumer Affairs Victoria leads to Victorian retirement village residents being exposed to financial exploitation by paying a maintenance charge greater than they have a statutory obligation to pay.

The statement by Consumer Affairs Victoria is from page 13 of their booklet A Guide to Living in a Retirement Village. It is contended that the statement misleads the entire Victorian industry when it comes to the methodology used to calculate the $ value of the maintenance charge. Whilst the statement may have been purposely simplistic given the nature of the publication, it has been adopted and practised by village operators statewide as law.

The misleading statement -

The retirement village can only increase your maintenance charge in line with the annual Consumer Price Index (CPI) adjustment.

A bigger increase is only allowed if it is approved by a resolution of the residents’ committee or a resolution of a majority of the residents.”

The statement guarantees the payment of a ‘maintenance charge’ at a $ value greater than village residents have an obligation to pay under the act. It deprives residents of the statutory protections afforded them under Sections 38.1, 38AA, 38.2, and 38.4 of the Retirement Villages Act.

The page 13 CAV statement incorrectly prescribes that the primary question to be asked in each and every year of village operation is – is the increase in the maintenance charge to be greater than a cpi increase. Residents are afforded protection under Section 38.2 which mandates the primary question each year is - is the $ value of the proposed maintenance charge to be greater than the Section 38AA cpi index % increased adjusted maintenance charge.

The ‘adjusted maintenance charge’ is not the previous maintenance charge adjusted for cpi. The confusingly named adjusted maintenance charge is a Section 38AA cpi calculated, standalone, $ value. A value to which the proposed maintenance charge is compared (benchmarked) for the purposes of affording residents protection under Section 38.2 each year.

The page 13 statement incorrectly prescribes that a Section 38.4 vote of residents is only required in those village years where the increase in the maintenance charge is greater than a cpi increase. Section 38.4 mandates a vote of residents in each and every village year where the $ value of the maintenance charge is to be greater than the Section 38AA cpi calculated adjusted maintenance charge.

Table A and then Table B below establish that for a village of 90 units, with a maintenance charge in the first full year of $624.00 per month, residents are misled into paying $357,062.62 more in their maintenance charge than obligated to pay under the RV Act. Using the Consumer Affairs methodology in Table A - 

1. The operator sought and was granted authority by unsuspecting residents in years 2 and 6 under the invalid CAV methodology of - the increase in the maintenance charge was greater than a cpi increase.

2.The operator contended that resident authority was not required in years 3,4,5, 7 & 8 under the invalid CAV methodology of – the increase in the maintenance charge was not greater than a cpi increase.

                                                                              Table A

Under the methodology espoused by Consumer Affairs Victoria, the operator failed to calculate a $ value for the statutory ‘adjusted maintenance charge’ despite having an annual obligation to do so under Section 38AA of the RV Act.

Table B below uses the provisions of Section 38.1, Section 38AA, Section 38.2 and Section 38.4 of the Victorian Retirement Villages Act to calculate the maintenance charge. The outcome over years 3.4.5.7.& 8 of village operation is a payment by residents of $357,062.62 in their maintenance charge above their statutory obligation to pay.

                                                                             Table B

Table B above calculates the $ value of the maintenance charge using the statutory provisions of Section 38.1, Section 38AA, Section 38.2 and Section 38.4 of the Victorian Retirement Villages Act.

The fee overpayment stems from -

1. The village operator in calculating the maintenance charge used the invalid methodology espoused by CAV in Page 13 of their booklet A Guide to Living in a Retirement Village. The actions of the village operator breached the provisions of Section 38.1, Section 38AA, Section 38.2 and Section 38.4 of the RV Act.

2. The operator failed to calculate in each and every village year (excl 1st) a $ value for the poorly named, stand alone, Section 38AA cpi calculated adjusted maintenance charge. (One is shown in Table B to illustrate the magnitude of the financial exploitation problem)

38.1 - "adjusted maintenance charge" means the adjusted maintenance charge determined and indexed in accordance with section 38AA;

38AA(2) - For the purposes of subsection (1), the adjusted maintenance charge must be determined for each relevant financial year for the retirement village in accordance with the formula—

3. The operator failed to compare (benchmark) the value of the proposed maintenance charge to a $ value for the Section 38AA cpi calculated adjusted maintenance charge. This action denied residents the protection afforded them each year under Section 38.2 of the RV Act.

38(2) Despite anything to the contrary in a residence contract, a management contract or the bylaws a resident is not required to pay a maintenance charge to the extent to which it is greater than the adjusted maintenance charge.

4. The failure of the operator to compare (benchmark) the value of the proposed maintenance charge to a $ value for the Section 38AA cpi calculated adjusted maintenance charge also denied residents the protection afforded them under Section 38.4 of the RV Act. That in each and every year where the operator proposes a maintenance charge at a $ value greater than the Section 38AA cpi calculated adjusted maintenance charge, village residents are granted the statutory right to choose which of the two values they will pay.

38(4) Subsection (2) does not apply if the payment of a maintenance charge that is greater than the adjusted maintenance charge has been approved by resolution of a majority of the residents at a meeting of tthe residents or is approved by resolution of the residents committee.

Table B establishes that residents were misled into paying some $357,000 more in their maintenance charge than they were obligated to pay under the provisions of Section 38.1, 38AA, 38.2 and 38.4 of the Victorian Retirement Villages Act.

This example is for an industry average size village of 90 units and paying an industry average size $624 per month toward village operating costs. There are some 450 villages in Victoria, housing some 36,000 Victorian retirees, operating under the provisions of the Retirement Villages Act. A frightening $160 million dollars in unauthorised charges over the period.



Monday, July 14, 2025

Retirement Village Residents Fighting Back

 Housing for the Aged Action Group posted the following details - 

Not just unfair, unlawful: VCAT rules against village charging Deferred Management Fees

Housing for the Aged Action Group welcomes a decision from VCAT President Justice Woodward which found that the Residential Tenancies Act prevented a land lease village from charging Deferred Management Fees (DMFs). DMFs are a common kind of exit fee charged across several types of retirement housing, often costing departing residents or their families tens of thousands of dollars or more.

“We have long said that these DMFs are unfair and, in some cases, unlawful,” said Shane McGrath, HAAG’s Senior Tenancy and Retirement Worker. “This decision confirms that some of the most common models for DMFs in land lease communities are prohibited under Victorian law.”

Click here for the full story - https://www.oldertenants.org.au/publications/not-just-unfair-unlawful-vcat-rules-against-village-charging-deferred-management-fees

Saturday, April 5, 2025

Retirement Village Rip-Off

 The Jacinta Allan Labor government 2025 Victorian Retirement Villages Act perpetuates the rip-off of charging a purchase price without gaining ownership, only occupancy in a retirement village. VOTE NO.

retirement village rip-off


Friday, April 4, 2025

 Currently Victorian retirement village residents wait 6 months for repayment of their refundable amount on leaving a village. The Jacinta Allan Labor government has pushed that out to 12. Why? Only 1 winner the operators pockets. Elderly Victorians lose, what do they live on, how do they go forward.

retiree repayment from 6 months out to 12 months


Sunday, March 30, 2025

What is wrong with Victorian Retirement Villages

The critical importance of retirement village resident submissions to Victorian state government inquiries is that they are actually living the experience not simply 'working in the field'. They know what is wrong because they have experienced it, suffered from it.

Victorian retirement village residents find that there is almost zero protection when something goes wrong, or the system to obtain that protection is so cumbersome, so demanding on them, that surrender is ultimately the chosen option. And village operators know that and use it to their own financial advantage.

All this from a Victorian Labor government that fails to enforce the law as it is currently written, let alone to improve it to protect the very people it was originally written to protect.

"The law was clearly on the side of the village residents. It was a lack of access to affordable, quick, decisive enforcement of the law that failed them most". - Retvilldotnet

Retirement villages, the process of for-profit operators seeking financial reward from this commercial activity under the guise of the provision of benevolent housing for older Victorians. Sadly and particularly in Victoria the commercial risks to operators are dampened by statute whilst at the same time the commercial rewards are enhanced by statute. 

For Victorian retirees who make that fateful decision to enter a retirement village it is the complete opposite. The payment of the capital value of the village unit, not for ownership simply occupancy. The payment of all the costs of property ownership with none of the rewards.

"Families need to be aware that what we are talking about here is the transfer of intergenerational wealth, not to families but into the pockets of corporations. Shame about the elderly not having enough money for aged care."

So what is wrong with Victorian Retirement villages, the answer is -

  1. Bureaucrats who don't really know or fully understand the product they are producing legislation for.
  2. Legislators who don't really know or fully understand the product they are enacting legislation for.
  3. State Governments who are far too easily seduced by slick marketing from the industry.
  4. A failure of all of the three parties above to listen to the one group of people who really do know and fully understand the product, the village residents and their families. 
Village residents understand because they suffer financially from the legislative inequities produced by Bureaucrats, Legislators, State Governments.


retirement village poverty trap