Plans to expand mandatory retirement village unit buyback reforms across Australia have taken another hit, with the news that a small Gold Coast operator is in financial distress because of the initiative.
On 12 November, the Gold Coast Bulletin reported that Sunny Ridge Retirement Village at Coombabah was having difficulty buying back unsold and abandoned units. The village is required to buyback the units under legislation introduced by Queensland’s Labor Government, which came into force in May this year.
The newspaper reported that the village operator was forced to sell her own home in Brisbane so she could buy an unsold unit, so the village could continue to operate.
Brian Shadler, the village’s body corporate residents association spokesperson was quoted as saying: “Our scheme operator is seriously stressed, financially and mentally. But it is apparent the Government does not care.”
The State Opposition accused the Queensland Government of being “incompetent” in its handling of the buyback issue.
News of the Gold Coast’s village’s distress comes after the Settlers Lifestyle group - which runs five villages in Queensland, NSW and Western Australia - announced that it was entering administration in August this year.
Administrator Damien Hodgkinson of DEM Asia Group told Commercial Real Estate that the Queensland Government’s legislation, which requires retirement village operators to buy back units from residents if they remain unsold for 18 months, had triggered an “insolvency event” at Lifestyle’s Rockhampton village.
The ongoing dramas with mandatory buybacks in Queensland may have ramifications for NSW, which is currently toying with introducing mandatory buyback reforms, along with other States and Territories across Australia.
The government said this would provide greater certainty to exiting residents, including stopping them paying ongoing fees when they have departed the village.
However, the buyback initiative was strongly opposed by the Property Council of Australia, which said it would cause village closures, particularly in regional and outer metropolitan areas. A further concern was that it would shut down innovation in the retirement village sector and kill the notion of freehold village units.
The government has yet to introduce legislation to implement the reform, despite indicating this legislation was due to be introduced in late 2019.