8 April, 2019
Owners of freehold retirement village units in Queensland will be able to trigger a mandatory buyback of their unsold unit, as part of an ongoing expansion of this policy reform across Australian States.
On 3 April 2019, the Queensland Parliament passed amendments to the State’s Retirement Villages Act, which apply to around 2,200 freehold owners of retirement village units.
The changes make it clear that the State’s mandatory buyback reforms - first introduced in 2017 - apply to freehold units, as well as leasehold and licence tenure units.
Until the Parliament’s approval of the legislation, there had been some doubt that freehold unit owners were eligible.
The legislative change means that retirement village residents are entitled to receive payment for their unit, if the unit remains unsold 18 months after the termination of their right to reside within the village. The amendments will apply retrospectively, from November 2017.
“Seniors leaving retirement villages should not have to wait more than 18 months to receive their funds after they decide to leave,” said Queensland Housing Minister Mick de Brenni.
“Seniors in this position often depend on these funds to pay for their next place of accommodation, such as aged care.
“This change will provide Queensland seniors with peace of mind in their retirement years.”
Heated Parliamentary debate
During a Parliamentary debate, Opposition MPs opposed the legislation, stating that it could cause hardship to retirement village operators, particularly ten freehold villages across the State which were owned and operated by residents.
Burleigh MP Michael Hart said he supported large corporate retirement village operators being forced to pay a mandatory buyback, but not resident-owned villages.
“We are talking about instances of freehold property where these people have, in good faith, gone into a retirement village, have paid hundreds of thousands of dollars and are now being faced with having to buy their neighbour out…because their neighbour has passed away, decided that they no longer want to live there or they have had to go into a higher care situation,” Mr Hart said.
“How are they going to find the money?”
Mr de Brenni responded by saying retirement village operators facing undue financial hardship could seek an extension of time from the Queensland Civil and Administrative Tribunal (QCAT).
“In these cases, QCAT must take into consideration whether an extension would be unfair to the former resident,” he said. “We’ve worked hard to make sure there is a fair balance between industry viability and consumer protection enshrined in this legislation.”
“I have asked the Department of Housing and Public Works to extend its services to resident operated retirement villages.
“(This will) help them understand their obligations, assist them to go to QCAT if required, provide advice regarding appropriate legal structures, and market and sell their units. This will be an independent service funded by the department.”
Freehold village residents make up about seven per cent of Queensland’s 29,000 retirement village community. More information, see this explanatory note on the legislation.
Trends across Australia
The concept of mandatory retirement village unit buybacks is spreading across Australia.
In February 2019, the NSW Government indicated it was going to introduce legislation supporting mandatory buyback reforms later this year.
Separately, in 2016, South Australia introduced mandatory buybacks.
According to the 2018 Property Council Retirement Living Census, around 65 per cent of retirement village operators offer voluntary or mandatory buybacks after a period of time.
By Mark Skelsey, News Editor at Downsizing.com.au, email Mark at [email protected]