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Is it better to buy strata-title or leasehold in a retirement village?

If you’re considering buying a dwelling in a retirement village, then you have two major options – strata title or leasehold. Read on to find out about how each option works, including upfront, ongoing and exit costs, as well as all the pros and cons.

How does strata title work with retirement villages?

Strata title villages require residents to buy freehold title to their accommodation (usually a self-contained unit or apartment). The resident then becomes a member of the village’s body corporate (called an ‘owners corporation’ in some States and Territories) and is entitled to vote on matters affecting all owners in the village.

A strata manager (usually the retirement village operator) manages the retirement village on behalf of the body corporate. This service usually includes:

  • managing the common property in the village (such as the grounds and other general use facilities).
  • providing retirement-related services (such as emergency medical, transport and/or personal services).


Upfront costs

Residents who buy strata title apartments in retirement villages must pay a lump sum upfront that will include the price of the accommodation plus stamp duty (called transfer duty in some States and Territories) and any relevant legal fees.


Ongoing costs

Strata title residents pay ongoing strata levies to the body corporate. These levies will cover the costs of managing the retirement village and providing its range of services to all residents. In addition, ongoing council rates may be payable, as well as the utility bills to their own accommodation.


Exit costs

The strata title owner (or their estate) will usually be charged an exit fee when the retirement village accommodation is eventually sold. This fee amount depends on the terms and conditions of the purchase agreement, and usually includes a percentage to cover the costs of marketing/selling the accommodation, as well as any repairs or renovations that may be necessary.

‘Retirement villages with no exit fees’ are sometimes advertised, but make sure you read the fine print of these agreements before entering into one. You may be charged higher upfront or ongoing fees instead.


The pros and cons of strata title in retirement villages

There are pros and cons of strata ownership in retirement villages. Let’s look at the pros first.



  • You get freehold title to your accommodation, and you (or your estate) can sell it at market value (less any exit or outgoing fees) in the future.

  • You will likely have a greater say in how the retirement village is managed by being able to vote on body corporate/owners’ corporation matters.
  • There is a higher upfront cost than there is with the leasehold village option.

  • You may not want to get involved with voting on body corporate/owners’ corporation matters.


How does leasehold work with retirement villages?

Leasehold retirement villages are where residents pay for a long-term or lifetime lease on the accommodation. Unlike the strata title arrangement, the village owner retains ownership in a leasehold arrangement. However, the lease protects the holder because if the village is sold by the owner, the lease remains in place.

The lease may contain a services agreement that outlines the services the leaseholder is entitled to receive, or this may be contained in a separate agreement. The lease normally ends automatically when the leaseholder dies.


Upfront costs

Residents who enter into leasehold agreements in retirement villages usually pay a market value for the lease. This value will depend on the quality of the property and the village facilities that the holder will be entitled to use.


Ongoing costs

Leaseholders will have to pay ongoing costs depending on the terms and conditions of the lease. These costs will include fees for managing the retirement village and providing its range of services to all residents. In addition, leaseholders must pay utility bills for their own accommodation.


Exit costs

The estate of leaseholders in retirement villages may have to keep paying ongoing costs until the village owner finds a new leaseholder – subject to statutory limitations which may vary from state to state. Renovation or repair costs may also be charged prior to finding a new leasehold buyer, subject to the terms and conditions of the lease.


The pros and cons of leasehold retirement villages

Like strata title villages, leasehold villages also have their pros and cons.



  • You have long-term or lifetime security of tenure.
  • There is usually a lower upfront purchase cost than there is with the strata title option.

  • There are more leasehold villages to choose from.
  • You don’t own the freehold title to your apartment.

  • The lease is not usually transferable as an asset in your will, and you will require professional advice to understand the specific terms and conditions which relate to the individual village.


What is better? Strata title or leasehold retirement homes?

There is no right or wrong answer about whether you should buy strata title or leasehold in a retirement village. Each option has its pros and cons depending on your specific financial situation, needs and goals. You should understand the specific terms and conditions relating to the village you are interested in and seek professional advice before making your decision.


Hot Tip!

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“One of the reasons that Thatcher promoted home ownership is that it promoted responsible citizens with a stake in society. But another reason was that those people would tend to be Conservative.”

Michael Portillo British MP

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