Recent developments in the Retirement Village sector is welcomed news for both residents and the industry.
There has been a significant amount of media attention in recent months regarding the booming retirement village sector. Unfortunately, not all of this media has been positive. As a result, the State Government has been called upon by a number of stakeholders to address various issues including the complexity of existing contracts and the fees and charges associated with living in a retirement village and leaving a village.
In July 2017 the NSW Government acknowledged that there were issues of concern in the retirement village sector and released a 4 Point Plan.
This plan included the following:
1. An overhaul of the Retirement Villages Regulation 2009 to provide greater transparency around fees and charges in contracts;
2. Introducing an online calculator to assist residents better understand the estimated costs of living in a retirement village;
3. Initiating a NSW Fair Trading compliance blitz targeting NSW retirement villages; and
4. An inquiry headed by Kathryn Greiner AO to examine all registered retirement villages across NSW and their compliance with the Retirement Villages Act 1999.
Amendments to the Regulation have since been implemented, which include amongst other things a requirement that a village make a copy of its insurance policy documents available to residents and a reduction in the legal fees a retirement village operator can charge an incoming resident from $200.00 to $50.00.
The inquiry initiated as part of the Government’s plan was conducted between August and December 2017. It included extensive consultation with the public, key stakeholders in the retirement village sector as well as industry experts.
The Greiner Review Report that was released at the conclusion of the inquiry outlines a range of findings and makes a number of recommendations to improve the legislative framework for retirement villages and the operational practises of both the industry and the regulator, NSW Fair Trading.
It is worth pointing out that the review also identified a number of positive experiences by residents, managers and operators, so it wasn’t all doom and gloom.
The Greiner Review Report found that the retirement village sector could be improved in 3 key areas:
1. Increasing transparency of exit fees and contracts;
2. Clarifying the funding arrangements for ongoing maintenance costs which are shared between residents and operators; and
3. Providing more support when disputes arise.
In June this year the NSW Government formally responded to the findings of the Greiner Review announcing that it was committed to implementing the recommendations of the Greiner Report and would introduce reforms in the industry to afford greater protections to consumers and to ensure that retirement villages remain a viable accommodation option for seniors. These reforms will aim to:
1. Increase transparency in the sector by reviewing and developing better disclosure documents and mechanisms for consumers;
2. Provide increased consumer certainty around key costs and charges for residents when entering, living in and exiting retirement villages;
3. Enhance accountability of operators and the sector to improve village living;
4. Improve the effectiveness of dispute resolution processes and outcomes; and
5. Strengthen Fair Trading’s oversight of the sector.
We expect to see some of these measures implemented relatively quickly, however others will require further consultation and development by the Government.
The retirement village industry has also been quick to respond and has shown a strong commitment to reforms in the sector, developing a Retirement Living Draft Code of Conduct.
The code has been developed by the Retirement Living Council, which is a division of the Property Council of Australia. While the Retirement Living Code of Conduct is currently a voluntary industry code, all retirement village owners may eventually be required to sign up to it.
The purpose of the code is to set and maintain high standards regarding the marketing, selling and operation of retirement villages and promote confidence and greater understanding of the retirement village sector.
So what does this all mean for retirees living in retirement villages and those considering entering a village?
With more than 3,000 retirement villages in Australia and almost 300,000 people living in retirement villages it is an important sector of the property market.
Thanks to the Greiner Review, Government and industry commitment, we can expect continued improvements to the regulation of the retirement village sector which should lead to a higher standard of quality and service in our retirement villages.
We can expect a greater level of transparency around retirement village contracts, particularly exit fees, the exit process, and costs of living in a retirement village. We can also expect better and more user-friendly dispute resolution processes.
However, there is never any substitute for good quality legal and financial advice when considering entering into any contract. While many of the issues raised during the Greiner Review can be avoided by seeking the right advice before entering into a village contract, positive reforms in the sector are certainly welcomed.