The average resident comparison figure (ARCF) adds up the total of the main fees a resident is likely to be charged when living in a particular village. It is designed to help residents understand and compare the financial cost of living in different villages.
The ARCF should not be relied on in place of the terms of a contract. It is an indicative figure only and does not represent the actual outgoing payments made by a resident. Prospective residents should also use the Retirement Villages Calculator to understand the costs of living in a village.
Calculating the ARCF
The ARCF must be included in Disclosure Statements from 1 March 2018. The ARCF is the sum of the following fees and charges over an assumed residency period of seven years (84 months), averaged to a monthly figure:
- the total amount of recurrent charges payable under the village contract
- the departure fee payable by the resident if the premises are permanently vacated at the end of that period; and
- capital gains, if any, payable to the operator by the resident in respect of the unit.
The calculation is as follows: (total amount of recurrent charges over 7 years + the departure fee payable after 7 years + the share of any variance in entry price to the next resident 'capital gain') ÷ 84 months.
Calculating an estimated departure fee or capital gains
Where the departure fee payable under the contract is based on the entry price, that price is used to calculate the departure fee payable. When the departure fee is based on the next resident's entry price, the next resident’s entry price can be estimated by using the applicable rate in Table 1 below for the relevant dwelling type (based on the current Australian Bureau of Statistics (ABS) data), over a seven year period. The next resident's entry price can then be used to work out the estimated capital gain that may apply.
The ABS data is updated each quarter and small variations can occur to previously published data. Operators should check the Fair Trading website, or the ABS data, regularly to ensure they are using the correct rates.
Table 1: Percentage rate of property value increase each year
Type of dwelling
Rest of NSW
Median Price of Established House Transfers (unstratified)
Median Price of Attached Dwelling Transfers (unstratified)
Examples for calculating the ARCF
- A detached, 2 bedroom villa within in a retirement village in regional NSW has an entry payment of $400,000.
- The contract includes a fee of $300 each week in recurrent charges.
- The departure fee is based on the next resident’s entry price. The departure fee is 4% each year for the first 3 years, and 3% each year for years 4 to 7.
- The resident is entitled to 100% of any variance in their entry price and the next resident's entry price (capital gain).
- An attached, 2 bedroom unit in the Sydney metropolitan area is available for an entry payment of $650,000.
- Recurrent charges for the ongoing costs are $2,500 each month.
- The departure fee is based on the next resident’s entry price. The departure fee is 5% each year for the first 3 years and 3% each year for years 4 to 7.
- The Operator and resident share 50/50 in any variance in their entry price and the next resident’s entry price (capital gain).
Total amount of recurrent charges over 7 years (A)
($300 x 52 weeks x 7 years) = $109,200
($2500 x 12 months x 7 years) = $210,000
Estimating the variation (capital gains) and next resident’s entry price (selling price) using the ABS data in Table 1
($400,000 x 4.34% x 7 years) = $121,520 variance (capital gain)
$400,00 + $120,400 = $520,400 (new entry price after 7 years)
($650,000 x 6.16% x 7 years) = $280,280 variance (capital gain)
$650,000 + $280,280 = $930,280 (new entry price after 7 years)
The departure fee payable after 7 years (B)
($520,400 x 24%*) = $124,896
*(4% x 3 years) + (3% x 4 years)
($930,280 x 27%*) = $251,176
*(5% x 3 years) + (3% x 4 years)
Capital gains, if any, payable to the operator by the resident at the end of 7 years. (C)
N/A = $0
($280,280 x 50%) = $140,140
ARCF = (A + B +C)/84
ARCF = 2787
ARCF = 7159