From November 1 2025, aged care homes will be allowed to charge an exit fee, up to 10% of your lump sum payment over five years. This change brings them a little closer in style to retirement villages, which often charge exit fees. Legally, financially and practically, they are still very different.
Accommodation & Contracts: Village vs Aged Care Home
Retirement villages are usually made up of independent-style living. Think apartments, villas or duplexes with kitchens, laundries and even multiple bedrooms. Your contract is typically a leasehold or licence agreement and may even be registered on title, depending on your state. Aged care homes provide a single room (sometimes shared), often with a private ensuite. Some have extras like balconies or sitting areas. But it’s not your property. It’s more like renting a room with round-the-clock care included.
What You Pay and How You Get It Back
In aged care:
- You can pay a RAD (Refundable Accommodation Deposit), a DAP (Daily Accommodation Payment) or a mix of both.
- The RAD is government-guaranteed and refundable (less any fees) after you leave or after probate.
- From November 1, aged care providers can retain up to 10% of your RAD over five years. For example, if you paid $500,000 and stayed for 5 years, you would get back $450,000.
In retirement villages:
- You buy the right to live there, but not always the property itself.
- There is usually an exit fee, often a percentage of the purchase or sale price and possibly deductions for renovation or selling costs.
- Your contract outlines when you’ll get your money back and whether there’s a guaranteed buyback timeframe if your unit doesn’t sell.
Ongoing Fees
Aged care homes charge:
- A basic daily fee of $23,294 per year (85% of the aged pension).
- A means-tested care fee of up to $34,311 per year.
- There is a lifetime cap on means-tested fees of $82,347 (June 2025)
Retirement villages charge:
- A regular maintenance or service fee to help cover village operations.
- Fees vary. Each village sets its own pricing structure.
The Level of Care
This is one of the biggest differences.
Retirement villages offer independent living. You might access a home care package or arrange private carers. Care is income-tested and can cost up to $13,724 per year, depending on your income.
But it’s important to ask:
- Who responds to the emergency call button?
- Can someone help during the night?
- What happens if your care needs increase?
Aged care homes provide 24/7 care as part of the service. Nurses, carers and support staff are always available to assist residents.
Home Ownership and Centrelink
- If your retirement village unit costs more than $252,000, Centrelink may treat you as a homeowner. This can affect your pension and make you ineligible for Rent Assistance.
- If it’s $252,000 or less, you may qualify for up to $212 per fortnight in Rent Assistance.
Which One is Right for You?
If you want independent living with some support and social opportunities, a retirement village might be the right fit. But it’s important to plan ahead for future care needs.If you or a loved one needs regular or complex care or is likely to soon, an aged care home may be more suitable, even with the introduction of the new retention fee.
Need help comparing aged care costs or understanding contracts? We’re here to help you make informed, confident decisions about aged care and retirement living. Get in touch to book a personal aged care financial consultation, completely customised to your situation.
