Since 2 February 2026, retirement village operators in South Australia have new restrictions on the amount by which they can increase recurrent charges for a retirement village.
Restrictions on increasing recurrent charges
Prior to the amendments to the Retirement Villages Act 2016 (SA) (Act), a recurrent charge could not be increased beyond a level shown to be reasonable in view of the previous year’s accounts and the estimates for the current financial year. However, since 2 February 2026 the Act imposes new restrictions on the amount by which an operator can increase recurrent charges.
Operators now must not increase a recurrent charge by an amount greater than:
a specified amount or amount calculated by a fixed formula in the residence contracts; or
otherwise by the CPI percentage increase for Adelaide for the preceding financial year.
As this is only a recent change to the Act, many residence contracts are unlikely to specify a specific amount or fixed formula for calculating an increase in recurrent charges. As a result, many operators will be restricted to increasing the recurrent charge by no more than the CPI percentage increase.
Exceptions to restrictions on increases
There are certain items that are not limited by the caps on increasing recurrent charges. These exceptions recognise that there are certain operating costs of the retirement village that are beyond the control of the operator and may increase beyond CPI. Increases attributable to the following exceptions are not capped at the amount or formula in the residence contract or the CPI percentage increase:
an increase in rates, taxes or charges levied under an Act in relation to the retirement village land or its use; or
an increase in the salary or wages of a person employed in the operations of the retirement village and payable under an award, certified agreement or other industrial instrument made, approved, certified or continued in force under the Fair Work Act 1994 or an Act of the Commonwealth; or
an increase in insurance premiums or insurance excesses paid in relation to the retirement village or its use; or
an increase in charges applying under maintenance contracts for the following types of services relating to the operations of the retirement village, after the operator has considered whether there are more cost-effective alternatives to the maintenance service:
security infrastructure and systems;
lift infrastructure and systems; or
waste management infrastructure and systems; or
an increase in the rates applying to utilities supplied to the retirement village.
While these exceptions are provided for under the Act they are very specific and narrow. It is important that operators undertake an analysis to determine what amounts of the recurrent charge is covered by the above exceptions and what amounts is restricted to the amount or fixed formula in a residence contract or the CPI percentage increase to ensure they are compliant with the new restrictions under the Act.
Alternatives to increase recurrent charges
Where an operator needs to increase the recurrent charge more than what is permitted under the above restrictions under the Act, the operator can seek to pass a resolution at a meeting of the residents to approve the higher increase. If the resolution is not passed by the residents, then the operator can make an application to the South Australian Civil and Administrative Tribunal for an order approving the increase to the recurrent charge.
Cowell Clarke’s dedicated Aged Care and Retirement Living Team continues to work closely with operators and aged care entities to ensure their best possible outcomes are achieved whilst ensuring compliance.
For further information, please contact our Aged Care, Retirement Living and Health Team.
Thank you to Ashley McConnell-Daish, Law Clerk, for her contribution to this insight.
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This article is for general information only and cannot be relied upon as legal advice. The application of and obligations under the Act and Regulations will depend on the type of operator you are and the services you offer. Do not act on the basis of this document but seek specific advice from your legal adviser.
