What is a DMF?

A Deferred Management Fee is a financial model commonly used in retirement villages to manage costs for residents. Instead of paying all fees upfront, a DMF allows part of the cost of living in the village to be deferred and paid when you leave, typically through the sale of your home.

This model can make retirement living more accessible, offering retirees an option to move into high-quality accommodation without having to pay large amounts at the outset. It’s an integral part of Teman’s service-led philosophy, helping to create secure and comfortable communities for its residents.

Why does the DMF exist?

The DMF exists to reduce the barrier to entry for retirement living.

Many retirees want to downsize, simplify their lifestyle, and live in a safe, well-maintained community, but don’t want to tie up all their savings in a new home. The DMF enables this by spreading the cost over time.

For residents, it means more flexibility. And for providers like Teman, it’s a sustainable way to maintain quality communities without pushing upfront costs.

How is the DMF calculated?

This is the part of the cost that is deferred and typically paid upon exit, when you sell your home.

This varies by provider and contract, but at Teman, we believe in a transparent approach.

In our villages, the DMF is calculated as a percentage of the sale price of your home when it’s sold to the next resident. That percentage is clearly outlined in your contract and is capped after a certain number of years, meaning you’ll never pay more than the agreed maximum, no matter how long you stay.

It’s like a membership; but you don’t pay at the beginning, you pay at the end.

We like to think of it as an “enjoy now, pay later” basis, that provides both predictability and peace of mind.

How much will I pay under a DMF?

Imagine you sell your family home for $650,000 and purchase a home at The Rise by Teman for $500,000.

This move frees up around $150,000 of capital, which you can use as you wish.

Whether that’s boosting your superannuation, travelling, buying a caravan, or treating yourself to a cruise. Plus, since there’s no stamp duty when purchasing at The Rise by Teman, you save over $17,000 compared to a regular property purchase.

Now, let’s say you live at The Rise by Teman for 10 years. When it’s time to move on, you sell your home for $690,000, reflecting the current market value.

The DMF in this case would be $207,000 (30% of $690,000). Even though you’ve lived in the village for a decade, the DMF is capped at 30%, and no further fees apply after six years.

This means you pay no DMF for the remaining four years beyond the cap, ensuring that your costs stay predictable.

Benefits of a DMF structure

The Deferred Management Fee model offers several distinct advantages, particularly for retirees who wish to enjoy a comfortable, secure lifestyle while freeing up capital for other pursuits.

Freeing up capital to enjoy retirement

One of the most appealing aspects of the DMF is that it frees up a significant amount of capital that would otherwise be tied up in a property.

Retirees often downsize when moving to a village, and with a DMF in place, they can do so without paying the full price of a new home upfront.

This gives residents access to their savings and investments, allowing them to travel, engage in hobbies, or simply enjoy life without the financial pressures that come with owning a larger home.

Predictable living expenses

With a DMF, most of your ongoing costs are predictable, which can be a huge relief in retirement.

This means you can budget with confidence, knowing that unexpected costs won’t arise, allowing you to focus on enjoying your retirement rather than stressing over potential financial surprises.

Maintenance-free living

Another great benefit of living in a DMF-based village is that the hassle of home maintenance is a thing of the past.

Teman’s communities, for instance, are designed to relieve residents of the burdens that come with maintaining a property. Whether it’s landscaping, fixing leaking roofs, or other repairs.

This is particularly valuable as we age and may no longer wish or be able to handle the physical demands of home maintenance.

Capped costs

A significant advantage of the DMF model is that the fee is often capped after a certain number of years, which provides peace of mind, meaning you won’t pay any additional fees even if you continue living in the village.

This protects residents from escalating costs and offers long-term financial predictability. This capped DMF is a reflection of Teman’s commitment to fair and transparent pricing.