Last updated 31 October 2022

Once a resident takes up occupation of the unit, they will be liable to pay a general services charge and a personal services charge (if applicable).

The general services charge has two main components:

  • the resident’s contribution to the costs of operating the village
  • the maintenance reserve fund levy.

The general services charge is normally made up of the resident’s contribution to costs of the operator in relation to management and administration, gardening, minor maintenance, the shop or other facilities for supplying goods to residents, and recreation and entertainment facilities. The basis for this charge is set out in an annual budget, which the operator is required to prepare (s 102A Retirement Villages Act 1999 (Cth) (Retirement Villages Act)). These charges are distinct from personal services charges, which are charges for services provided to an individual resident. They may include charges for services such as laundry, meals, cleaning and other personal services.

While there are no restrictions on the operator to increase personal services charges, the Retirement Villages Act does restrict the increase in general services charges. Specifically, the total general services charges cannot increase in any year by more than the Consumer Price Index unless the increase relates to (s 106 Retirement Villages Act):

  • rates, taxes or charges levied on the village itself
  • salary or wages of persons employed in the village
  • insurance premiums or insurance excesses paid in relation to the village
  • maintenance reserve fund contributions.

Under the goods and services tax (GST) legislation, the operator is entitled to impose GST on general services charges or personal services charges where it is required by the GST legislation.

In freehold retirement village schemes, residents may also have to pay an administration fund levy to the body corporate as well as rates on the unit.

Residents are usually also required to pay for their own services such as electricity, gas and telephone.

The operator is required to have a maintenance reserve fund that is to be used for maintaining and repairing (but not replacing) the retirement village’s capital items, such as communal facilities and the units themselves (s 97 Retirement Villages Act).

Residents are responsible for contributing to this fund, which is done by way of a maintenance reserve fund levy that forms part of the general services charge referred to above.

Payments are made into the maintenance reserve fund from:

  • the residents’ contributions
  • interest from investment of the fund
  • any amount that the operator held in a similar fund before the commencement of the Retirement Villages Act.

The amount to be held in the maintenance reserve fund and the consequential levy on the residents is determined each year by a quantity surveyor. The surveyor produces a report that sets out the likely maintenance costs for the village over a 10-year period that must be revised yearly. A full report was mandatory in 2009 and must be obtained in every third financial year after that, as well as in any financial year in which substantial changes are made to the village (s 98 Retirement Villages Act). In every other financial year, an update of the previous report is sufficient. The operator uses this report to determine the appropriate levy on each resident.

There are no restrictions on increases in the maintenance reserve fund levy as there are with the general services charge, but the levy itself must be determined based upon the quantity surveyor’s report. It is important to bear in mind that it is likely for the maintenance reserve fund levy to be higher in older villages than it will be in newer villages.

The operator is also required to have a capital replacement fund, which is used for the replacement of the village’s capital items. Operators themselves are solely responsible for contributions to this fund (s 91 Retirement Villages Act). Capital items would normally include:

  • the buildings and structures owned by the scheme operator such as communal facilities, amenities and the accommodation units
  • plant, machinery and equipment
  • roads, paths, drainage, sewerage mains and landscaping.

Again, the amount required to be held in the capital replacement fund is determined by a quantity surveyor’s report, which must be updated on the same basis as the report for the maintenance reserve fund.

Payments are made into the capital replacement fund from:

  • payments from any insurance policies arising from the destruction of any capital items
  • interest from investment of the fund
  • a capital replacement fund contribution which is either:
    • a percentage of the ingoing contribution paid by the resident as set out in the VCD
    • the amount determined by the quantity surveyor’s report.

Freehold retirement villages may also keep a sinking fund for the capital replacement of items owned by the body corporate.


The operator must take out general insurance for the retirement village, and residents themselves are required to contribute to the costs of that insurance through payment of their general services charge (s 110 Retirement Villages Act). The insurance cover must be for reinstatement of any of the capital items in the village including the accommodation units.

Residents themselves are required to insure any items that they own in their units and are advised to take out their own contents insurance and even public liability insurance within their unit.