The NSW Government is continuing with its promised retirement village sector reforms with new laws to be introduced into parliament later this year that will see exit entitlements paid more quickly when residents depart their village.
Minister for Better Regulation, Kevin Anderson recently announced that the new reforms will improve access to exit entitlements, create a new mechanism to support residents moving to aged care, and place a 42-day cap on the payment of recurrent charges for general services.
Under the proposed changes, if a former resident’s unit remains unsold after 6 months in metropolitan areas or 12 months in regional areas, residents will be eligible to receive their exit entitlements if the village operator has not taken reasonable steps to facilitate a sale.
These further reforms address key recommendations of the independent report into NSW Retirement Villages conducted by Kathryn Greiner AO. This report found that some residents waited years for their unit to be sold by the operator before they received their exit entitlements.
The Minister said, “Waiting extended periods of time to receive your exit entitlement can cause a financial and personal burden. That’s why we’re putting in a safety net that will require operators to buy back the unit from the resident if they don’t use their reasonable endeavours to sell it within the appropriate time period.”
These reforms will also cap recurrent charges at 42 days after a resident moves out and will make it easier for retirement village residents to transition directly into aged care.
it is not surprising that more than 60 percent of residents transition from villages directly into aged care accommodation. However, many struggle with the associated costs if their unit does not sell quickly.
Under the proposed reforms, the operator will need to cover a portion of the estimated exit entitlement directly to the aged care provide, allowing for a more seamless transition into aged care accommodation.
According to government figures retirement villages currently accommodate over 66,000 retired people, and this number is expected to double by 2033. Given these large numbers the retirement village sector is certain to continue growing at a fast pace and it will be more important than ever for the government and operators to strike the right balance between reform and growth.
If you have any questions regarding Retirement Village legislation please contact our firm to make an appointment with one of our experienced solicitors on (02) 4944 3322.