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The costs of living in a retirement village

Chris Torney / 26 April 2016

An explanation of some of the charges and fees you might have to pay if you buy a retirement village property.

Exit charges often help to keep the service charges affordable for current residents
Exit charges often help to keep the service charges affordable for current residents

If you are thinking about buying a home in a retirement village, it is important that you clearly understand what charges you will face on an ongoing basis as well as potentially in the future.

One of the biggest attractions of retirement villages is the fact they offer a wide range of services and amenities and are kept in excellent condition at all times. 

In general, they are also very secure, allowing access only to residents and their guests and visitors. 

The apartment complexes which make up the typical retirement village also have numerous communal areas – such as hallways, roofs and lifts – which require upkeep.

10 great reasons to live in a retirement village.

How residents cover these costs

All these factors mean that property owners in retirement villages usually have to pay ongoing charges, typically on a weekly basis. These service charges may be levied on each apartment but can vary based on the size of the property and how many people live in it.

It is important when you are considering buying a home in a retirement village that you understand what ongoing costs you will face, what they are for, and to what extent they might increase in the future.

Did you know? Saga has a contemporary new retirement village, set in the Wiltshire countryside, for people over 60 who want to live life to the full.

Exit charges on property sales

However, it is worth bearing in mind that these service charges are often kept at a lower level than they might otherwise be. This is because landlords often impose an exit fee on any property sales, for example when residents move into full-time residential care or when they die.

Exit fees are very common in retirement villages and they are usually calculated as a percentage of the sale price. If the owner of a retirement village flat died and their family inherited the property, they would have to pay this fee from the proceeds of the sale.

One reason for the existence of such fees is so that ongoing service charges can be kept at a more reasonable level – subsidised, in effect – and they also provide the village with a “sinking fund” which can cover the cost of major works, such as resurfacing of roads and footpaths or the redevelopment of swimming pools or restaurants.

By delaying the imposition of these charges until the resident dies or moves into residential care, the cost of living in the village is made more affordable for current residents.

Confused by all the jargon? Read our retirement village jargon buster.

Like an estate agent

Some retirement villages liken the fee to the charges made by estate agents when they help to sell a property. In effect, the village is doing the same job as an estate agent in marketing the community and helping to find potential buyers – this is another justification for exit fees.

As with an estate agent, the fact that they are getting a percentage of the sale proceeds gives them an extra incentive to get the best possible price for the apartment.

How exit fees are worked out

In some cases the exit fee might be a single fixed percentage, while in others they can be made up of different parts.

For example, a retirement village could impose one fee to cover the administration of the sale of the property – this would be a fixed percentage – and another to cover the backdated contribution to the development’s sinking fund.

In the latter case, the charge is likely to be dependent on the length of time the property has been occupied. Again, it is very important that you and your family put yourselves in the picture when it comes to what exit fees will be charged to avoid any unpleasant surprises further down the line.

It may well be the case that your relatives are more than happy to have these costs taken out of the value of your estate given the considerable advantages and peace of mind that living in a retirement village has to offer.

How will living in a retirement village affect your legacy?

Renting out your retirement village home

Before you buy, it is also worth checking whether any conditions apply to your ability to let out your apartment to tenants. In most cases, this should be permitted but is likely to be subject to the approval of the landlord or developer in question.

The exit fees may be applicable in the event that you move out and decide to rent out your apartment – or if your family decides to do this rather than sell the property they have inherited.

In addition, the landlord may stipulate that extra exit fees are paid every 10 or 20 years, say, on buy-to-let retirement village properties. This is to make up for the fact that the property is not being sold and therefore the landlord is not receiving the fees that it would expect, and which are necessary for investment in the development.

For further information about retirement living and how to find your perfect home, download and read our complete guide to Retirement Living and Villages.


The opinions expressed are those of the author and are not held by Saga unless specifically stated. The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.