Retirement Villages & Granny Flats

As a person ages they may choose to look at alternative accommodation arrangements to living in his/her own home. One option may be to consider a retirement village and another may be a granny flat arrangement.

When a loved one is deciding where they want to live and what sort of care they need, make sure they know the difference between a retirement village and what is called “residential aged care”.

Retirement villages are an independent living option. The person buys the right to live in a retirement village under various types of contracts but the government does not help with any of the costs.

This is different to aged care where the person receives full care and the fees are regulated by government, with the government paying some of these fees.

What is a retirement village?

A retirement village is effectively a community of older people who are living independently (or with limited services). The type of accommodation may vary and could be a unit, a villa or a house. In most cases the person does not own their residence. Usually they will enter into a lease/loan type arrangement.

Many villages only offer self–care units for people who can look after themselves. Some villages also offer serviced units, where residents maybe provided with meals, house–cleaning, laundry and some personal care.

Some complexes include both retirement villages and aged care facilities.


Before moving into a retirement village you & your loved one should review the contracts carefully to understand the legal structure.

There are at least eight different legal structures:

  • Long-term lease
  • Long-term license
  • Strata title
  • Community title
  • Unit trust
  • Manufactured home
  • Conventional lease

Each option may raise different issues for stamp duty, GST, service charges and fees, security of tenure, termination, vacating the premises, capital gain or loss and credit risk.

What is a granny flat arrangement?

Generally a granny flat is considered to be a self-contained unit attached to a private home but social security uses the term ‘granny flat right’ to assess living situations where money or assets have been transferred in exchange for a right to a lifetime accommodation.

If you’re confused about the best option for your loved one, get in contact. We have qualified aged care advisers who can assess living situations and determine which options are best suited to your personal situation and living requirements.

The information contained in this publication is based on the understanding Aged Care Steps Pty Ltd has of the relevant Australian legislation as at the date shown in this publication. The information contained in this publication is of a general nature only and is intended for use by financial advisers and other licensed professionals only. It must not be handed to clients for their keeping nor can any copies of sections of this publication be given to clients. Aged Care Steps operates under AFSL 486723 and is a registered tax (financial) adviser under the Tax Agent Services Act 2009. We recommend that your client be referred to their registered tax agent or legal adviser prior to implementing any recommendations mentioned in this publication.

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