They are billed as a retiree's utopia: A playground for adults that is fun, safe and can even help you live a longer, healthier, and happier life.

Retirement villages are home to more than 250,000 older Australians, drawn by polished marketing that promises independent living in a safe community environment.

But ABC Investigations and 7.30 have uncovered another side to a sector that for years has managed to largely escape the interest of state and federal politicians and dodge the blowtorch of an aged care royal commission in 2021.

The industry, which has minimal regulatory oversight, has been described by retired actuary and academic Tim Kyng as peddling "cunningly designed rip-offs" and by crossbench federal MP Rebekha Sharkie as engaging in a form of "corporatised elder abuse".

Some of the elderly residents or their families describe them as a financial prison, a disaster and ethically bankrupt.

Many complaints centre on the fees charged when residents leave, which often include an exit fee and the cost of refurbishing the villa.

One retirement village resident, 89-year-old Joan Green, sees it as a form of robbery.

After buying in 11 years ago for $384,000, she will walk out with $81,000 after the retirement village operator deducts its various fees.

"I feel … like I've been robbed," she says.

Ms Green, whose health is deteriorating, moved into Tranquil Waters retirement village in Victoria Point, Queensland, in 2013 with her son Kieron, who has a brain injury.

The decision to move into the village has left the family in a financial bind.

"It's very sad that you can get to 89 and have lost your life savings," her daughter Colleen says.

She says her mother has been losing sleep over it.

The payout isn't enough to pay for an aged care room so she has had to join the waiting list for a government-subsidised spot.

Colleen Green is not alone. 

Dozens of current and former residents, their children, lawyers, former staff, real estate agents, academics and an auditor specialising in retirement villages claim that most residents don't understand what they are signing and go backwards financially when they leave.

One of the industry's biggest drivers of revenue is exit fees.

Retirement villages collect an exit fee when a resident dies or leaves.

It is based on a percentage of the purchase or sale price on a sliding basis over the number of years of occupancy.

Caps on exit fees can vary widely, depending on the contract and the operator.

At Tranquil Waters, the retirement village contract Joan signed 11 years ago includes an exit fee of 60 per cent on the sale price.

Other fees include refurbishment costs of $20,000, sales costs and administrative costs.

All up, she stands to lose about $300,000, or 80 per cent of what she originally paid to buy into the village. The village operator expects to resell the home for $675,000.

If she had bought a home in the same suburb, over the same period it would have more than doubled in value, according to CoreLogic.

This would have been enough to pay for a room in aged care and have money left over.

Tranquil Waters was sent a series of questions but has yet to respond.

'It's heartbreaking'

Like exit fees, refurbishment or "reinstatement" fees can also vary dramatically.

Some operators require the resident to pay for painting and replacement of carpets, while others require dramatic renovations.

Lynette Anderson is still smarting over the cost of "reinstating" her mother Ruth's apartment after informing her Living Choice retirement village at Twin Waters on Queensland's Sunshine Coast that she had to move into aged care after a series of strokes.

Living Choice, which is also a licensed builder, determined what needed to be done and quoted a staggering $167,000 to do the job.

The list of modifications spanned three pages, including new plasterwork, new paint, new tiles and carpet, a new air conditioner, electrical, plumbing, doors, new bathroom and ensuite cupboards and even a new clothesline.

Other costs were $3,500 for a project manager, $3,447 to prepare and paint the garage floor and $1,080 for a final clean, which was more than double what the ABC was quoted by a different cleaning company in the same area.

The list of costs came despite a condition report completed by Living Choice, which found most of the home was in a "reasonable" or "fair" state.

"They gutted the place," Ms Anderson says.

The contract also requires Ruth to pay an exit fee of 35 per cent and an additional $15,400 fee to Living Choice for selling the house.

The operator expects the home to sell for about $700,000, which will leave Ruth with $257,962, a fraction of the $564,950 she paid for the place in 2015.

"When you buy a home, you don't expect to lose half your money when you leave," Lynette Anderson says.

"It's heartbreaking."

Despite the villa being empty, Ruth is still being charged $814 a month in maintenance fees, which cover the pool, gym, library, bowls green and clubhouse.

In a statement, Living Choice says the company's contracts clearly set out what residents are charged when moving in, while living in the village and when they move out.

It says it encourages prospective residents and their families to get legal advice and requires them to tell it in writing if they choose not to.

It says that in Queensland, "under the existing Act, residents are required to reinstate due to damage they have caused beyond fair wear and tear and if they receive capital gain on re-sale they are required to renovate their home and the cost of that renovation is shared [in] the same proportion as capital gain is shared".

The company also says refurbishment costs have "risen considerably" since COVID.

"This has not just affected the retirement village sector, it has obviously affected the entire building industry and all sectors."

The company says its "disclosure documents articulate clearly the works that the residents are responsible for when they vacate the property".

"If a resident wishes to engage its own builder to complete the same works, they are more than welcome to do so."

It says that while some residents have had to pay as much as $150,000 for reinstatement, others have paid nothing, depending on the contract.

'Cunningly designed rip-offs'

As the housing affordability crisis and aging population time bombs grip the nation, this multi-billion-dollar industry is positioning itself as a solution.

In November last year, the lobby group for the retirement village industry, the Retirement Living Council — a division of the powerful Property Council — released a national report entitled Better Housing for Better Health, outlining the benefits of the sector.

The aim was to send a strong message to governments about "the value of the sector, the affordability it provides in an otherwise unaffordable housing market and why its residents live healthier lives".

In a press release at the time, it said the sector has "actual solutions to Australia's two biggest worrying trends — our housing crisis and our rapidly aging population".

Its central premise is that retirement village housing is much cheaper on average than buying a home in the same area, and if more retirement villages were built it would help close the housing supply gap and save governments more than $1 billion a year by 2030.

Retirement Living Council executive director Daniel Gannon told the ABC that "the average price of a two-bedroom unit in a retirement village is on average 43 per cent cheaper than homes in the traditional housing market, compared to the median house price in the same postcode".

It's an argument that chills retired actuary Tim Kyng, who jointly built a retirement village calculator with Macquarie University to try to help people understand the true cost of living in a retirement village as well as compare different village contracts.

Dr Kyng has looked at hundreds of contracts and found in most cases, retirees leave with less than they went in.

"They are cunningly designed rip-offs," he says.

Under most contracts, if a person dies or leaves the village, they or their estate are charged maintenance fees until the unit is sold.

Some states have placed a limit on how long a retirement village can continue to charge fees after some villages were found to be charging sellers for up to four years.

'It's ethically bankrupt'

A feature of most retirement villages is the operators sell the properties and set the selling price, which can be convenient for the seller as real estate agents sometimes shun selling retirement village homes due to the complexity of the process.

But it can also create conflicts as the operator is effectively controlling the market by setting the price, the timing of the sale and who can buy in, particularly if the resident is desperate to sell.

One former retirement village resident, Ann Threlfall, lost tens of thousands of dollars after spending less than three years at a retirement village in Victoria.

She paid $310,000 in 2017 and after deducting various fees including exit fees she was left with $243,000.

Ms Threlfall left after a series of bad encounters with residents and village management.

"It's taken me four years to get back on my feet, and I'm now 70," she says.

Roz Priest's mum Judith had a similarly bad experience.

Judith sold her retirement unit in Kilsyth, Victoria to move into an aged care facility this year.

She paid $410,000 to enter and left with less than $314,000.

"We were just gobsmacked, how can you come out $100,000 worse off?"

The fees included $26,700 for refurbishment, which included $110 for a new cutlery insert. "Some of these costs are preposterous.

"It's ethically bankrupt."

Industry pushes for benefits

In its Better Housing for Better Health report, the Retirement Living Council claims residents in retirement communities are 41 per cent happier and physically and mentally healthier than the community at large.

However, in a survey last year of NSW residents by the NSW Retirement Village Residents Association, 40 per cent of respondents across 120 villages reported abuse of some kind.

Mr Gannon says the Retirement Village Residents Association report also found that "most cases of bullying were actually perpetrated by residents onto other residents".

"But any abuse that takes place, any dissatisfaction in retirement communities, we don't want to see."

He said operators have made contracts simpler over the past few years but admitted there was "still way too much complexity in these contracts".

"We have been talking to governments about more consumer protections, about complaints commissioners, whether or not we should have an ombudsman-style body, whether there should be a mandatory government-imposed code of conduct because this is not an us versus them sector."

"We do know that there aren't many complaints, but is there more work to do? Absolutely."

The Retirement Living Council also claims the planned extra 18,000 retirement dwellings will reduce the housing gap by 18 per cent between 2023 and 2030.

The lobby group suggests the $1 billion a year in government savings will come from a reduction in government spending on aged care as retirement village living delays entry to aged care by two years.

It said there were currently 2 million Australians aged over 75 and this would increase to 3.4 million by 2040. It calls for a string of taxpayer-funded benefits.

It wants the federal government to loosen the assets test for the age pension when people move into a retirement village.

The council also says operators should be allowed to benefit from two existing taxpayer-funded schemes for pensioners from which they are currently largely excluded: rent assistance and a program that allows pensioners to take out an interest-free loan from the government, secured against their home ownership.

At the state level, it wants looser planning controls over villages and land set aside to develop them in "undersupplied areas".

It also wants "a central housing information service to better provide information on rightsizing options for older Australians", although the lobby group does not explain who should pay for this.

It claims its recommendations are "practical, cost-effective solutions to help deliver better housing for better health, which will support the 250,000 people who currently call a retirement community home and those set to become residents into the future".

'A form of corporatised elder abuse'

Centre Alliance MP Rebekha Sharkie is one of the few politicians pushing for reform.

Her federal electorate of Mayo has the highest average age in South Australia, and her constituents have told her harrowing stories of bullying, gouging and oppressive contracts.

"It's marketed as a kind of Nirvana. You're going to meet so many new friends, you're going to have a really easy time of it, and when you leave, the price of your unit's expected to increase, so you're not going to be out of pocket. But that's just not the reality that I've seen for so many people.

"I see retirement village contracts as a form of corporatised elder abuse."

Last year, she moved a motion in parliament calling on the federal government to beef up consumer protections for Australians entering retirement villages.

She said this could be done through national reforms or harmonisation of retirement village regulation regimes, which are state-based.

She also called for retirement villages to be categorised as a financial product, a move that would bring them under federal oversight and the corporate regulator, ASIC.

Ms Sharkie says retirement village arrangements were excluded from the definition of financial products in the 1980s and defined as "excluded securities" because they were viewed as real estate rather than investments.

"If an agreement looks like a financial product and behaves like a financial product it should be regulated like one," she said.

Over the past 18 months, Ms Sharkie has continued to lobby and write to various federal politicians, including the assistant treasurer and minister for financial services, Stephen Jones.

In one letter to Mr Jones in April 2023 she said the "regulatory patchwork" of state and territory regimes was inconsistent and provided limited consumer protections for retirement village residents.

"Reimposing greater Commonwealth regulation of retirement villages could bring into play prohibitions on misleading and deceptive conduct, unfair contract terms and unconscionable conduct and requirements for licensing, higher standards and an enforceable, consistent federal retirement village code of conduct," she said.

She called for a parliamentary inquiry to examine the effectiveness of current regulations and said high exit fees meant some former residents could not afford a higher level of care if they needed it after moving out of a village.

In a letter in July, Mr Jones said the Australian government was focused on improving housing outcomes for Australians, noting that the regulation of retirement villages lay with state and territory governments.

He pointed her to the SA authority if she needed assistance and told her consumer protections under the Australian Consumer Law, including those related to unfair contract terms, applied nationally.

He provided a link to the ACCC. He told her he would raise the issue at the next meeting of Commonwealth, State and Territory Consumer Ministers, and would update her of any outcome.

She is hopeful something will come out of the meeting later this year.

Calls for reform largely unheeded

The lack of appetite to fix the sector has gone on for almost 20 years.

In 2007, a parliamentary inquiry exposed some questionable practices and, in a report titled Older People and the Law, said the ACCC should play a stronger role in monitoring consumer protection for retirement village residents and "while the matter should continue to be managed at the state level for the time being, should there be insufficient improvement in the level of protection for consumers, the Australian government should consider regulating this industry using its powers under Corporation legislation".

It recommended the ACCC and state consumer affairs and fair trading departments review all aspects of exit and other fees, including whether they should be banned.

The report's recommendations were never acted on.

In 2017, after Four Corners aired Bleed Them Dry Until They Die, which exposed the unethical business practices of Aveo, one of the country's biggest retirement village operators, the ACCC launched an investigation and state governments promised to overhaul regulations.

Once again, little happened.

Victoria held a parliamentary inquiry that resulted in a series of recommendations that are yet to be implemented almost eight years on — despite the government agreeing to them.

NSW and other states launched inquiries that led to some minor but important reforms, including imposing a timeframe for the payment to residents after some operators were taking up to four years to sell a home and repay a resident. During that time, residents had to pay maintenance fees. In some states, that is now six months.

But it didn't address the key issues of exit fees, whether to ban or impose a cap on the size of them, or the appointment of an ombudsman.

Colleen Green believes governments need to step up.

From her perspective, retirement villages are a trap.

And while governments and regulators continue to turn a blind eye, "the elderly are just being sucked in".

Watch this story tonight on 7.30 on ABC TV and ABC iview.