Dear members and residents
President’s Update on Regulatory Matters in Retirement Villages in NSW
The RVRA has been fighting for many years* on several fronts in order to better protect the interests of our members and other retirement village residents. I thought it timely to outline the current status of a certain number of these projects. Click below for details...
*The RVRA has been working for members for well over 30 years - see https://www.rvra.org.au/about
Dispute Resolution
We have fought (and continue to fight) to have a separate dispute resolution entity – apart from NCAT- to decide disputes between residents and operators. Letters have been written to the Minister, Fair Trading and the Commissioners for Fair Trading and Strata and Property Services. I would note that we are not alone in our dissatisfaction with the Tribunal, and we have tried to present a common front between us and the Owners’ Corporation Network (“OCN”) for Strata issues.
If you attended our last AGM, you would have heard the Acting Executive Director for Policy and Delivery (Angus Abadee) advise that we would not be able to get all we want at this time.
We have now received a letter from the Deputy Secretary for Customer Service – essentially advising that for financial reasons, a separate entity will not be possible at this time. Instead, the intention is to strengthen the powers of Fair Trading to better deal with and mediate the issues that are undoubtedly there.
- We have advised Fair Trading and Commissioner Mann that this is disappointing but not unexpected given the financial restraints the NSW government is experiencing.
- We have also advised that neither the RVRA nor OCN will in any event stop pursuing the case and would be very interested in working with Fair Trading to see what can be achieved in the interim.
Our objective still remains a separate independent body that can obviate the current imbalances of power between operators and residents.
The Retirement Villages Regulation is under review and we have two main issues of concern – the cap on recurrent charges and simplification of asset management plans.
The cap on recurrent charges – Regulation 26AA
It is the RVRA’s contention that the Regulation is poorly written and does not meet the objectives of residents.
It is our opinion that Reg 26AA was inserted to provide an incentive to operators to sell as quickly as possible those units for which vacant possession had been given to the operator - hence the 42-day cap on recurrent general charges to be paid by the departing unit holder. And hence the wording of s.152(3) of the Act:
“The operator of the retirement village must not increase the recurrent charges payable by the residents of the retirement village as a result of any liability that may be incurred by the operator once the former occupant’s liability to pay recurrent charges ceases under subsection (2), unless the regulations otherwise provide.”
Our contention is that it was intended that the operator should be liable in all circumstances to pay the charges in respect of any vacant units with one limited exception under Regulation 26AA - where residents formally agree to pay those charges in the subsequent budget year only.
We believe that there are circumstances where operators could use the ambiguity of the Regulation to seek reimbursement for payments made in the previous year in the budget for the following year.
One of the gaps in the legislation relates to the particularities of Section 114(8) of the Act – where there is a sub-CPI budget presented, and approval is deemed to be given.
It should be clear that use of a sub-CPI budget to include charges for vacant units being recovered from residents should not be permitted. There should – in all cases- be a requirement for an explicit and specific approval by special resolution, by residents to cover the “missing” recurrent charges.
We have proposed a rewording of the relevant part of the Regulation and await the response of Fair Trading on this matter.
Asset Management Plans simplification
We are encouraged that there is some progress being made that will simplify the Regulation and enable the production of 3-year projections to form the budget – in a simplified and standard way. The Property Council and the RVRA have made some joint proposals as to how this can be achieved. So far it seems that Fair Trading is on board with most of our comments.
The issue we face is that the sunset clause for revising the Regulation has now been extended to September 2025, and our feeling is that the revised regulation will not be in force in time for the 2025/ 2026 budgets.
Conclusion
I hope that the above gives you some indication of where we are at with just some of the major issues facing residents.
In addition, we have advised Fair Trading and the Commissioner for Fair Trading that the issues affecting the Regulation often have their source in the Retirement Villages Act itself and our objective is to continue to pursue amendments to the Act.
As has been previously advised we are concerned particularly with:
- Distribution of surpluses
- Treatment of deficits
- The potential issues arising from s.136 of the Act when partial or full redevelopment takes place – the impact on residents who are required to move.
- Better protection for residents when operators fail.
And so on – still many issues out there!
Craig Bennett
RVRA President
During September RVRA Board members met with representatives from the Property Council, other State Retirement Village Associations, the Retirement Living Council, Fair Trading, and various Operators.
While the ABC TV 7:30 Reports certainly gained attention there seems to have been only minor interest among retirement village residents, most of whom appear content with the choice they made to live in their village.
The RVRA is only too aware of the problems that exist; however the feedback we are getting from members is that making the decision to live in a retirement village requires research which most residents were quite capable of doing at the time.
To provide a more balanced view of how present residents choose their village and understand the conditions of their contracts, the combined Retirement Village Residents Associations are surveying residents across Australia for their input.
You should receive an invitation to participate in this Survey during November.
To assist retirees looking at the option of a retirement village, the Education Centre is preparing a series of short videos – “Living in a Retirement Village”.
This edition of the Bulletin highlights the need for incoming residents to scrutinise their contracts carefully with the help of their legal and financial representatives, and to be aware of the Village Rules and how they will impact their lives – and, of course, to make sure family members are aware of the choices made and why.
Members Enquiries
Board members answered 29 enquiries from members in September covering a total of 48 categories (some enquiries covered 2 or more call categories).The largest number of calls categories were about:
- Residents Committees (12), followed by
- Legal and Legislation (11),
- Information (10),
- Management (6), and
- Finance/Budgets (5).
Members can access Information Sheets dealing with these and many other topics in the Members Only section of the website. https://www.rvra.org.au/members-only/rvra-information-sheets
The Retirement Villages Educational Resources Centre
Many of the enquiries we receive each month are about Residents Committees, and a common theme is a basic misunderstanding of the village Residents Committee and what they can and can’t do. These are topics covered in the RVRA Workshops, which are now being rolled out to villages in NSW. If you are interested in holding a full or half day workshop in your village, or accessing our zoom workshop, please contact us on info@rvra.org.au for further information.
Village Visits
If you wish your village to be included in the Village Visit schedule, please contact Cathy on 1300 787 213 (option 1) if you have not already done so.
Survey
The annual RVRA Budget Survey closed on the 27th September and a preliminary report was presented in last month’s Bulletin. We will present the full report next month.
The 2024 RVRA AGM
The RVRA AGM was held on 26th September . If you were unable to attend you can view the video and read the President’s and Treasurer’s reports in the members area on the RVRA website: https://www.rvra.org.au/members-only/agm-documents
NB: The video will take some time to load as it is over an hour long and therefore a very large file.
Did you know that you have the right to meet with your village operator* once a year to find out about the estimated costs you would have to pay if you were to leave your village?
Here in NSW, the Retirement Villages Act allows you to meet with your village operator once each calendar year to discuss your contract and to get a better understanding of the process involved when leaving the village. At this meeting your operator will provide a verbal and written summary of all costs you would incur if you were to leave.
* The representative is usually the village manager.
You are allowed to have family, friends or advisors attend the meeting with you to give you support or assistance, or you can nominate one or more people to represent you at the meeting if you are unable to attend. If you include your family or next of kin it can be a good opportunity to ensure that they understand the terms of your village contract and what will happen when you exit your village. This is important as in many cases they will be the ones dealing with the exit process and contract termination.
The information that the operator is required to provide at this meeting varies depending on whether or not you are a registered interest holder (you are a registered interest holder if your contract is in the form of a registered long-term lease that includes a provision that entitles you to at least 50% of any capital gain) and must be based on the terms and conditions of your contract.
In general the Act requires that your operator explain to you and provide you with a written summary of:
- your rights and obligations in relation to leaving the village (terminating your contract)
- estimated departure fee (if applicable)
- estimated fees and charges involved with selling the unit (if applicable)
- estimated sale price, or estimated ingoing contribution of the next resident (as applicable)
- estimated amount payable for repairs required to your premises (if applicable)
- estimates of any other fees or charges that apply when leaving the village (including an estimate of any capital gain shared with your operator)
- how long recurrent charges may be payable after leaving the village
- an estimate of the final monies you would receive upon leaving the village, after you have paid all fees and charges.
Any costs and other estimates your operator provides must be reasonable and they must take into consideration factors that may influence the estimate, such as the features and characteristics of your residence.
To arrange to have a review meeting you need to make a request in writing (e.g. e-mail or letter) to your operator, who is required to have a face-to-face meeting with you within 30 days of receiving your request. This 30 day period allows your operator sufficient time to review your contract, calculate any figures and prepare for the meeting.
Your operator can nominate someone to conduct the meeting but that person must have the appropriate authority, qualifications and skills and also be capable of explaining and answering questions about your contract information.
These contract “check-ups” can help you understand your options so that you and your family can plan for the future. And the good thing is this a free service - your operator isn’t allowed to charge you for preparing or providing you with the information you will receive.
For more information:
- RVRA Information Sheet 25 “Residents Meetings with Management” in the Member’s Section of the website - https://www.rvra.org.au/members-only/rvra-information-sheets
- Fair Trading’s “Village Contract Information Meeting” which gives a checklist and the template for the information to be provided by Management -
Fran Varga
RVRA Secretary
Most of us living in retirement villages are looking for a peaceful environment in a nice home or villa surrounded by like-minded people. And it is quite often our last home before moving on to either a nursing home or our final resting place. Part of the moving in process is that we sign a contract with the operator/owner that specifies such arrangements as, freehold, leasehold, recurrent charges, exit costs, refurbishment costs and other costs.
The ABC TV 7.30 Report on Monday 30 September 2024 highlighted some isolated reports relating to residents who did not fully understand their contract. And in a couple of cases the children of the resident did the talking and were disturbed about the contract conditions. Unfortunately, it appears they did not know of or did not fully appreciate the terms of the contract their parent/s had signed.
When we sign the contract, we are bound by the conditions within it. However, the RVRA often gets calls about issues that can be answered by referring to the contract. Unfortunately, a lot of residents do not fully understand what they signed up for and get upset when a cost is pointed out to them as part of their contract.
Equally so, residents’ kids often have no idea what their parents’ contract entails. They get upset and often angry when told the sale price of the home is not what they receive as beneficiaries of a will or guardians when their loved one goes into a home. They were not aware of exit fees, or that there is a 50% capital gain owing to the operator/owner. This lack of knowledge places unnecessary stress on the resident, their children and the manager of the village who has to point out the details of the contract.
If residents are unsure of their contract, they are entitled to arrange an Annual Contract Meeting with the manager to go over their contract and what the current situation is within their village. If possible, it is a good idea to invite children/guardians along to become familiar with the terms of the contract and ask questions at the time. If no one can attend send them a report of the meeting so they are prepared in the event they need to take action with your estate.
So the message is – “talk to your kids”, let them know the conditions of your contract before you move out and they are left to work it out for themselves.
Roger Pallant
RVRA Vice President
Among the papers attached to your contract received on entry to your village, you will find a copy of the Village Rules. Don’t briefly glance at them then forget where you have put them – the Village Rules set out the behaviour expected of residents and visitors in the community you have just moved into. They are legally binding on the manager, employees, residents, tenants and visitors to the village. The NSW Civil and Administrative Tribunal (the Tribunal) can terminate a resident’s residence contract for serious or persistent breaches of a rule, so they deserve more than just your cursory glance!
The Retirement Villages Act 1999 allows Village Rules to be written which relate to “the use, enjoyment, control and management” of a retirement village (s 46). They include the making of noise, parking, visitors, pets, smoking, etc., and can only be changed by a special resolution vote by the residents (s 51), which needs support by at least 75% of residents who are voting. However, Village Rules made under the Retirement Villages (RV) Act do not apply to a village or part of a village subject to a strata scheme or a community land scheme. These residents are subject to different by-laws.
Of course, when doing your due diligence before you moved into your village, you will have noted the Village Rules which might be of importance to you and your lifestyle – these are the rules often mentioned in advertisements for the village – no pets/pet friendly, smoking permitted/not permitted. Obvious and straightforward. But, not surprisingly, these are the rules which can cause disputes to arise in villages, particularly where the rule is ambiguous or has been changed by a special resolution of the residents.
In the first 6 months of 2024, 3% of the main topic of the enquiries to the RVRA were in regard to Village Rules – not top of our list of topics (Budgets and Finance with 33% won hands down) but similar to the number of enquiries about meetings, or repairs and maintenance. Most of the calls referred to problems with compliance with parking and traffic, smoking, pets, noise, gardening and visitor rules.
Some rules appear to be more difficult than others to enforce – as demonstrated by one of the recent ABC 7:30 Reports that centered on smoking in a Retirement Village, where this rule had been changed by the residents from “smoking permitted” to “smoking not permitted” - see ABC News 3-10-24 - Retirement-village-pinnacle-living-accused-of-harassing-resident...
While this example reflects the change in attitudes to smoking and acknowledges the problems of passive smoking, it highlights only one side of the problem, and neglects to point out the effects on other members in the community.
So how does the community enforce the rules which, after all, have either been tacitly agreed to by individuals when they joined the village, or democratically discussed and voted on by a majority of residents before implementation? What come-back have residents when rules are persistently violated?
The legislation requires residents to respect the rights of other residents and staff (s 83) and to abide by the Village Rules (s 55). Residents and the Residents Committee (RC) have no legal role regarding residents who breach the legislation or the Village Rules except to report the matter to management.
The Rules of Conduct for Operators (Reg Sch 3A) specify that management must prepare and maintain a complaints and disputes procedure. Interestingly, management must specify a process for the resolution of internal disputes “between 2 or more residents” (Reg Sch 3A 27 (1b)). This does not refer to disputes of a personal nature, but rather, community living issues. Sadly, many villages do not have a Dispute Resolution Procedure which is rigorously followed.
Complaints can be lodged directly with management, but if management does not provide a reasonable response, or their efforts to resolve the problem do not succeed, then NSW Fair Trading can be contacted. They can give advice, intervene directly with management, offer mediation or advise whether it’s reasonable to go to the Tribunal (see Information Sheets - IS 10, IS 35).
Village Rules need to be reviewed every so often to check they are unambiguous, relevant and do not contravene the RV Legislation. Before changing a rule or adopting a new rule, clear communication and discussion within the community and with all affected parties is needed. After adoption, a clear pathway to assist in mediation and dispute resolution should be in place and easily available to all.
The choice to live in a Retirement Village comes with an agreement to observe the Village Rules. For some, that might be too high a price to pay for the companionship, convenience and security of community living.
Diane Hart
RVRA Board Member and Chair Education Centre
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We understand that everyone is impacted by the cost of living crisis, however, we ask if you can help in ensuring that the RVRA will be able to continue its vital work in supporting retirement village residents.
We are fortunate to have a strong volunteer board, with experienced RV residents who devote hours to understanding and assisting with our members’ needs.
None of this would be possible without our membership subscriptions, government grants and thoughtful donations.
We invite you to support our vision of ensuring a fair and affordable retirement living experience for all NSW retirement village residents by making a tax-deductible donation if you can.
So, to give us a more sustainable future:
https://www.rvra.org.au/donate
On behalf of the RVRA Board - thank you for your ongoing support.
Kind regards
Craig Bennett
RVRA President
The RVRA appreciates the support of the following professional services organisations.
To become a Supporter of the RVRA, contact us.