Changes to the Retirement Villages laws
Retirement villages legislation is reviewed on a regular basis and the laws are scheduled to be reviewed again. Information on the review process and proposals for change will be published on our website when they become available.
The previous review resulted in changes to residence contracts and budget and financial reporting requirements, which are explained in more detail below.
How changes affected residents
Retirement Villages laws were updated, throughout 2014 to 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 must be given a comprehensive disclosure document (Form 1 or Form 1A) at least 10 working days before they sign a residence contract.
Form 1 applies to residence contracts where a 'premium' is a payment made to secure the right to live in a particular unit in a retirement village. It includes the purchase price for a unit in a strata or purple title village as well as the entry payment for a lease village but does not include a payment of $1500 or less paid to secure a lease of 12 months or less.
Form 1A applies to residence contracts with a term of 12 months or less for which an initial amount of $1,500 or less is payable.
Read more on Information you must be given from retirement villages.
Since 1 October 2015 all retirement village contracts are required to address a range of mandatory matters or provisions and are prohibited from including some matters or provisions.
Contracts must include:
- specific information about the fees and charges a resident will pay across the term of the contract;
- 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; and
- a copy of the termination schedule approved by the Commissioner for Consumer Protection.
Contracts must not include provisions which:
- require residents to give the operator (or a close associate of the operator) a power of attorney.
- do not calculate exit fees on a daily pro rata basis.
Mandatory matters only 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 call the Advice Line on 1300 304 054 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 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.
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) was 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:
- Limiting a former non-owner resident’s liability to pay recurrent charges after they permanently vacate a village. This provision commenced on 1 April 2014.
- 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 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 requiring a resident to confer on the village operator a ‘power of attorney’ through to a requirement that exit fees calculated by reference to a period of time can only be calculated on a pro rata daily basis. While the prohibited provisions commenced 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 previous review of the code resulted in:
- Provisions increasing the consistency and transparency of financial reporting in relation to village operating and reserve funds by specifying 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 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:
- be provided with a written statement of all refurbishment work to be carried out including costings
- dispute proposed refurbishment works and/or
- 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.
You can find a copy of the current Code at Fair Trading (Retirement Villages Interim Code) Regulations (note: interim codes are replaced every six months).
More information about the consultation is available from the the Retirement Villages legislation review page.
The retirement villages laws include:
- Retirement Villages Act 1992
- Retirement Villages Regulations 1992 (RV Regulations)
- Fair Trading (Retirement Villages Interim Code) Regulations (note: interim codes are replaced every six months)
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