Victorian retirement village residents could soon have the right to require operators to purchase their dwelling, if proposals in a government options paper become law.
The Victorian Government has issued an options paper looking at proposed changes to the State’s retirement villages legislation. This paper is currently open for community and industry consultation.
One option proposed is that residents of strata-titled retirement village dwellings gain the right to require operators to purchase their dwelling, after they have left the village and the dwelling has not sold within a set period of time.
The paper notes that residents occupying a retirement village dwelling under a lease or licence arrangement can at present require the operator to re-purchase within six months of leaving, but no such provision exists for strata units.
“Compared to the general residential property market, the sale of retirement village units can take significantly longer,” the paper says.
“Whilst residents on strata title arrangements can also take on an active role in the resale of their residence, there are no provisions on the repayment of the exit entitlement if their residence remains unsold.
“Some other jurisdictions have introduced requirements to repay a resident’s exit entitlement within specific timeframes, which are sometimes referred to as ‘mandatory buybacks’.”
The concept of mandatory unit buybacks has traditionally been opposed by the retirement village industry, which argues that it places an unreasonable financial burden on operators.
According to the 2020 Retirement Living Census, around 70 per cent of villages across Australia already have a guarantee to buy back unsold units, including 41 per cent which have voluntarily made this offer and 29 per cent which are required to do this under State or Territory law.
In an initial response to the Victorian options paper, Retirement Living Council executive director Ben Myers said: “The Property Council is looking forward to contributing to the Victorian review of the Retirement Villages Act, as it provides an opportunity to support sensible reform.”
“It is important that any outcome is appropriately balanced, where consumer interests are protected but further investment into purpose built age-friendly communities is encouraged.
“These outcomes are achievable, and the paper provides an opportunity to re-examine the requirements on village residence contracts, which can lead to boosting the overall attractiveness of the industry to potential residents and operators.
“There are lessons that can be learned from other states by Victoria, particularly looking at the effect of exit entitlements in other States and the impact that this has had on their respective markets.”
Other proposals in the options paper include to:
- Requiring village disclosure statements for potential future residents to be made online
- Providing a statutory definition of deferred management fees, and expanding education materials about these fees
- Amend the timeframe in which ongoing fees (personal services and maintenance charges) can be charged to residents leaving a retirement village.
Comments are being sought until 26 April 2021.
After evidence from operators that such a policy could cause job losses and village closures in regional and outer metropolitan areas, the NSW Government amended its proposed reforms so that mandatory buybacks only applied where operators unreasonably delayed sales. The NSW reform also excludes strata and freehold retirement village units.
The Queensland Government is currently reviewing its mandatory buyback policy, which does apply to strata and freehold units.