TrueCost is a new feature on Downsizing.com.au that gives you a clear, personalised breakdown of the costs of moving into a retirement village—before you sign anything.
Powered by VillageGuru, a TrueCost Report shows your entry fees, ongoing charges, exit fees, potential equity, pension impact, and buyback timeframes in plain English. Simply look for the TrueCost badge on listings and tick the box to request your free report. It’s the easiest way to make one of life’s biggest financial decisions with confidence.
Five Steps to Calculating a Retirement Village Exit Fee
A simple guide to calculate what you’ll pay (and what you’ll keep) when you leave
By Rachel Lane
If you’ve looked at moving into a retirement village, chances are you’ve come across something called an exit fee (also known as a Deferred Management Fee or DMF). It’s one of the most misunderstood parts of retirement village contracts—and one of the most important to understand before you sign.
That’s why Downsizing.com.au has launched TrueCost, a new type of listing that gives you a personalised retirement village financial report, powered by VillageGuru.
When you see a TrueCost Listing, you can request a free, plain-English report showing:
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What your entry, ongoing, and exit costs will be
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Your potential equity and future return
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The timeframe for any guaranteed buyback
It’s the simplest way to get clarity before you make one of the biggest financial decisions of your life.
Why Exit Fees Matter
The exit fee is the amount deducted when you leave the village—whether that’s to move into aged care, relocate elsewhere, or after you pass away. This figure can sometimes run into the hundreds of thousands of dollars, so knowing it upfront is critical.
The easiest way to calculate and understand these costs is with a TrueCost Report, but if you want to do the maths yourself, here are the five key steps.
Step 1: Start with the DMF
Almost all retirement villages charge a Deferred Management Fee (DMF). A common structure is 30% over 5 years, but it varies widely—anything from 0% to 100% is possible.
Some examples:
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3% per year for 10 years (30% total)
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35% capped over 3 years
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No exit fee at all—for a higher entry price
Make sure you know:
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The percentage per year
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The maximum cap
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The accrual period
In some cases there’s no cap, which means the fee grows for as long as you live there—potentially reducing your equity to zero.
Step 2: Understand What It’s Based On
Is the DMF calculated on:
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Your purchase price, or
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The resale price (what the next resident pays)
Example:
If your DMF is 5% per year capped at 6 years, that’s a maximum of 30%. On a $400,000 purchase price, your DMF will be $120,000, regardless of how long you stay beyond six years.
If it’s based on resale value and the unit appreciates at 2% annually, a $400,000 unit today could be worth $488,000 in 10 years. At 30%, the DMF would be $146,279—higher than if calculated on the purchase price.
Step 3: Add Your Share of Capital Gain or Loss
Some contracts let you share in capital gain or loss—others don’t.
For example:
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50/50 share of any increase or decrease in value
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Operator keeps all capital gain/loss
Step 4: Other Exit Costs
Many contracts include extra costs when you leave, such as:
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Reinstatement costs (returning the property to original condition)
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Refurbishment costs (updating to current village standard)
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Sales and marketing fees
These can add tens of thousands to your exit costs—so it’s essential to understand them before you buy.
Step 5: Estimate Your Return
When you’ve tallied the DMF, share of capital gain/loss, and other costs, you’ll know your Exit Entitlement—the amount you’ll walk away with.
Also check the timeframe for payment. Many contracts have a guaranteed buyback, meaning the operator pays you after a set period if your home hasn’t sold. This is important if your next move is into aged care, where timing can affect your ability to pay fees.
How TrueCost Makes It Easy
Instead of juggling multiple figures, market estimates, and contract terms, you can request a TrueCost Report from any participating TrueCost Listing on Downsizing.com.au.
TrueCost, powered by VillageGuru, will:
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Compare up to 3 retirement villages side-by-side
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Show your costs, pension impact, and exit entitlement in plain English
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Provide your buyback timeframe and other key contract details
It’s fast, clear, and designed to give you peace of mind before you decide.
Look for the TrueCost Badge
When searching on Downsizing.com.au, keep an eye out for the TrueCost badge on listings. These are the properties where you can tick the box to request your free TrueCost Report and get the clarity you need to plan your retirement with confidence.
