Changes to the Retirement Villages laws

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New laws for retirement villages have begun to be implemented.  

A period of transition has been included in the timeframes for the major changes which include residence contracts and budget and financial reporting requirements, which are explained in more detail below. 

How changes will effect residents

Retirement Villages laws have been updated, throughout 2014 - 2016, to address some of the issues raised in a comprehensive review of retirement villages legislation.  

Prospective residents - disclosure statements

Since April 2014, prospective retirement village residents should have been given a comprehensive disclosure document at least 10 working days before they sign a residence contract. Prospective residents are encouraged to consider a range of retirement villages by collecting disclosure statements from a number of villages and using these to form a view as to whether a particular village will be suitable for their long-term housing needs. The disclosure document has to contain answers responding to a series of questions about the village including the:

  • premium or other entry costs which will be payable to move into the village;
  • estimates of the amount which may be payable to the resident when they move out (including estimates of exit and other fees payable if the resident was to exit after 1, 2, 5 or 10 years occupation). In relation to any estimates it is important you are aware these are often based on assumptions the premises will increase in value by 5% for each year of occupation. In this regard, there is an array of circumstances that affect the value of premises in a retirement village including market forces which may make a 5% increase each and every year unlikely;
  • an explanation of daily, weekly or monthly operating costs that will be charged;
  • amenities and/ or services available, and if fees and charges apply, what is the basis for determining those charges; and
  • how any budget surpluses, reserve funds and resident consultation are to be managed in the village.

A prospective resident who has not moved in, may cancel the contract within seven working days (or 17 working days after they receive the disclosure document where it was not provided within the 10 working day time period).

Progress update:

The pre-contract disclosure statement currently prescribed in the Retirement Villages Regulations 1992 is in the process of being revised with a view to introducing a new statement as soon as amendments to the RV regulations can be finalised.

Two versions of the disclosure statement are being developed in consultation with industry and resident stakeholders.

The first numbered ‘Form 1’ will apply to all residence contracts other than a small group of contracts to which a second pre-contract disclosure statement numbered ‘Form 1A’ will apply.

Form 1A will apply to residence contracts with a term of one year or less for which an initial amount of $1500 or less is payable.

It is proposed the new disclosure statements will have a three month transition period during which retirement village operators can either use their existing pre-contract disclosure statements or the new pre-contract disclosure statements.

Residence contracts

From 1 October 2015 all retirement village contracts will be required to address a range of mandatory matters or provisions and will be prohibited from including some matters or provisions.

Mandatory matters - Contracts must include:

  1. specific information about the fees and charges a resident will pay across the term of the contract.
  2. details about personal services, communal services, personal amenities and communal amenities the resident will receive or have access to if they move into the village
  3. copy of the termination schedule approved by the Commissioner for Consumer Protection. 

Prohibited matters - Contracts must not include provisions which:

  1. require residents to give the operator (or a close associate of the operator) a power of attorney.
  2. do not calculate exit fees on a daily pro rata basis.

Mandatory matters will just apply to contracts entered into on or after 1 October 2015 with three exceptions (relating to urgent repairs, variations in communal amenities and variations or the introduction of new communal services).   In relation to these exceptions, existing residence contracts do not have to be varied because a provision of the legislation operates so that existing contracts will be interpreted as containing those provisions. Operators may opt to vary existing contracts to insert the relevant provisions but this is not a requirement of the legislation.

The prohibited provisions apply to all residence contracts and will be read as void so variations to existing contracts will not be required. Operators may opt to vary contracts to remove any prohibited provisions but this is not a requirement of the legislation. If any residents are asked to sign a new contract or to agree to variations to their existing contracts they should ring the Seniors Housing Centre for further information. This means operators are not required to amend existing contracts but will be required to have compliant contracts for all new residents.

The existing requirements have also been strengthened in relation to:

  • proposed budgets, quarterly and annual financial statements, both for the operating account and for any reserve fund they contribute to (these requirements will apply from the 2016/17 financial year). 
  • the information residents receive about proposed refurbishment of the residential premises after a resident has left the village, including all the potential charges the resident would have to contribute to the cost of such work. These provisions also enhance the existing capacity of the State Administrative Tribunal to deal with refurbishment disputes.

Law reforms

The reforms include changes to the regulations and the code as detailed below. 

Changes to the regulations

Amendments were published in the Government Gazette in March 2016.  The primary purpose of the Retirement Villages Amendment Regulations 2016 (Amendment Regulations) is to introduce two new disclosure statements Forms 1 and 1A, with additional notes and information on the regulations. 

Other reforms in the Retirement Villages Regulations 1992 that have already commenced include:

  • Excluding a sum of up to $1500 paid as a ‘security bond’ for a short term residence contract (12 months or less) from the definition of ‘premium’ in the Retirement Villages Act 1992 (the Act). This provision commenced on 1 April 2015.
  • Matters or provisions that must be included in residence contracts – mandated provisions range from general matters through to more specific provisions relating to the charges and fees a resident will pay across the term of the contract or details of the communal amenities, communal services and personal amenities and services a resident will receive or have access to if they move into the village. As many of these issues are already addressed in residence contracts the majority of these provisions will only apply to contracts entered into after 1 October 2015.
  • Matters or provisions that must not be included in residence contracts – prohibited provisions range from prohibiting a contract containing provisions require a resident to confer on the village operator a ‘power of attorney’ through to a requirement for exit fees calculated by reference to a period of time can only be calculated on a pro rata daily basis. While the prohibited provisions will commence on 1 October 2015 they apply to all residence contracts and any prohibited provisions in existing residence contracts will be void by virtue of section 14A(4) of the Act.

Changes to the code

The reforms in the Fair Trading (Retirement Villages Code) Regulations 2015 include:

  • Provisions increasing the consistency and transparency of financial reporting in relation to village operating and reserve funds by using the existing model forms in Appendices 2, 3 and 4 of the Interim Code to specify line items for the operating budget, reserve fund budget, and quarterly and annual financial statements to clarify the minimum level of information to be disclosed. These provisions will apply to existing retirement villages from the 2016/17 financial year onwards.
  • Including a more thorough refurbishment process for residential premises in the retirement village to increase transparency and accountability for the amounts residents are charged prior to and during any refurbishment of the premises that they occupied. This includes a right for the resident or their representative to inspect any refurbishment works prior to paying any money.
  • Extending the State Administrative Tribunal’s existing jurisdiction to deal with refurbishment disputes.
  • Inserting capacity for residents to confer the functions of a residents’ committee on an incorporated association.
  • Inserting Secret ballot provisions by which residents voting at a meeting of residents can elect to vote by secret ballot.
  • Provisions to ensure costs are shared between the parties to a dispute to which the resolution process in the Code applies or that is referred to mediation by the Commissioner for Consumer Protection.

Consultation

More information about the consultation phase is availlable from the our Retirement Villages legislation review page.

Retirement villages laws

The retirement villages laws include:

 

Need advice?

For assistance or general information on retirement living options, please call the Seniors’ Housing Centre on 1300 367 057.

Our senior’s housing section contains general information on the range of options available.  

Contact the Seniors' Housing Centre

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