The reality is a slow transfer of their hard earned capital wealth, not to their families, but to greedy corporations. Then they have to rely on the Australian taxpayer to fund their aged care costs.
The Victorian Labor government has just written an operator centric legislative framework to support this process.
Victorian Retirement Village residents can pay multiple times the cost of a residential tenancy for what is the same primary product, residential accommodation. Retirement villages are all smoke and mirrors hiding the true cost.
There is a problem with the new Victorian Retirement Villages Act, the Jacinta Allan Labor government allows village operators to abuse the statutory term 'adjusted maintenance charge'. Village residents are misled into believing that the 'adjusted maintenance charge' is the 'maintenance charge' for the previous year adjusted for cpi. This is incorrect and residents are overcharged tens of thousands of invalid fees.
By statute the 'adjusted maintenance change' is the 'maintenance charge' in the very first year of the village adjusted for cpi in each year thereafter. There is an easy fix just change 'adjusted maintenance charge' to 'BENCHMARK FEE'.
Hollow claims of striking a balance between facilitating industry growth and innovation with retirement village resident consumer protections.
Financially trapped into the village due to the business model enforced by the Jacinta Allan Labor government legislation.
How do they fund themselves over that period? An absolute con job by the industry.
The government seduced by the industry into believing that they do not have the money to repay the outgoing retiree. This money was paid to the village operator by the retiree before they could move into the village.
It shows a clear failure of the industry to manage cash flow, and a clear failure of the government to understand the principle of cash flow management.
Why does the Victorian government love retirement village operators by contracts requiring residents to pay an ingoing contribution, or entry fee, or buying price, to get into a residential tenancy independent living unit, ILU, in a retirement village where they can be charged deferred and multiple split priced rentals.
The Victorian Jacinta Allan Labor Government 2025 version of the “ingoing contribution” Retirement Village loan/lease business model denies property ownership to a retiree for merely conditional occupancy, a 'residential tenancy' by any other name. This action hidden within a convoluted and misleading occupancy contract.
Despite the payment by the retiree of an 'ingoing contribution' often commensurate with an ownership cost, actual property ownership is held by the operator. In a further burden on the retiree the financial benefits of this 'property ownership' are retained by the village operator whilst all the financial costs of this 'property ownership' are transferred on to the retiree.
To rub further salt into the wound there is a Deferred Management Fee for the retiree to pay which can be as high as 40% on the 'ingoing contribution' paid. This fee is essentially a 'rental' payment by any other name hence the claim by retirees of paying double the odds, property ownership costs without the ownership plus a substantial 'rental' fee which by government statute is not allowed to be called 'rent'.
With receipt of the ingoing contribution and the retention of property ownership, retirement village operators can by statute transfer ownership costs and add a deceptively termed deferred fee, essentially a rental component, into complex contracts to double the effective rental over the retiree's occupancy period.
Legislators and Consumer Affairs Victoria have consistently failed to identify the spectacular profit increase by the operators using this Loan/Lease business model. A model which uses ambiguous and misleading mechanisms to hide the true cost of the occupancy in relation to the comparative market rate for residential tenancy. Only property ownership for the retiree can negate the blatant deception of Victoria's retirees, retirees who make the financially devastating decision to spend most if not all of their lifetime accumulated asset base to enter a retirement village.
On having entered the loan/lease retirement village the asset base is diminished over time through the cost of property ownership but without the ownership, the cost of the 'rental' deceptively named the deferred management fee, the further destruction of their asset base by the devaluation impact of inflation over the length of the occupancy period.
The Victorian loan/lease model for retirement village is best summed up - "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."
The charging of an entry fee 'a purchase of property but without property ownership'. Misleading and convoluted occupancy contracts provide a smokescreen for what is essentially a residential tenancy by any other name.
The scales of justice weigh heavily in favour of the retirement village operator and against the retiree.
The Victorian Retirement Villages Act from 1986 to 2024 had the primary objective of the legislation as 'to clarify and protect the rights of residents'. The new operator centric Act for 2025 appears to be 'to clarify and enhance the profits of operators'.
The new act amplifies the statement -
