Reforms to retirement village laws
Important changes to the Retirement Villages Act and Regulation came into effect on 1 March 2010. The changes include:
- annual management meetings between operators and residents
- annual safety inspections
- a settling–in period for new residents
- reducing the recurrent charges payable by a former occupant after vacating
- encouraging operators to keep recurrent charge increases at or below the rate of inflation
- increasing operators’ accountability for budget deficits
- ensuring urgent repairs are carried out quickly
- cutting red tape for smaller village operators
- improving the way residents committees operate and making it easier for more residents to be involved
- giving residents the right to make reasonable alterations to their dwelling
- better protection of refund entitlements for residents who do not have a registered interest in their dwelling.
Annual management meetings
Operators are required to conduct annual management meetings with residents and to answer questions submitted by residents either before or at the meeting. The Regulation lists matters that must be included on the meeting agenda.
Top of pageSafety and emergency procedures
All village operators are required to prepare written safety and emergency procedures and take reasonable steps to ensure that residents and staff are familiar with such procedures. Operators are also required to conduct a safety inspection at least once each year and report back to residents on the findings of these inspections.
Settling–in period
New residents who terminate their contract by permanently vacating their premises within the first 90 days of moving in are only required to pay a fair market rent for the period of their occupancy and a reasonable administration fee to the operator. The maximum administration fee the operator can charge is $200.
Departure fees are not payable. The resident is entitled to a refund of their ingoing contribution or purchase price plus any recurrent charges paid under the contract. The timing for payment of the refund depends upon the type of village contract in place. Where the resident does not have a registered interest in the premises, for example where they occupied the premises under a loan or licence arrangement, they will be entitled to a refund of their ingoing contribution within 14 days after termination of the village contract. Where the resident purchased a registered interest in the premises such as buying into a strata scheme or entering into a long term registered lease, the resident is entitled to a refund of the purchase price once the unit is re-sold or re-occupied by another resident.
Encouraging recurrent charge increases to be at or below inflation
Operators are encouraged to keep increases in the recurrent charges payable by residents at or below the rate of inflation, by removing the need to gain resident consent for such increases and reducing the notice period from 60 to 14 days. The Regulation includes a transitional provision so that this change will not come into effect until the second budget cycle following reforms. For the 2010–11 budget, resident consent is required regardless of whether recurrent charges are to increase by more than the CPI except where the village contact provides for recurrent charges to be varied in accordance with a fixed formula.
Reducing ongoing recurrent charges after a resident vacates
For residents who do not own their accommodation, the maximum period of time a former resident or their estate can remain liable to pay recurrent charges after they vacate or pass away has been reduced from 6 months to 6 weeks.
For residents who are owners, after 6 weeks the recurrent charges must be shared between the outgoing resident and the operator in the same proportion as they are to share any capital gains under the contract.
Capital repairs and maintenance
The existing provisions regarding capital repairs and maintenance are being retained, with some refinements. Operators will continue to pay for the replacement of capital items. Recurrent charges will continue to fund capital maintenance. The Regulation now prevents recurrent charges from being used to pay for improvements to capital items or to repeatedly repair an item that it would be more cost effective to replace. For more information refer to the Repairs, maintenance and replacement page on the Fair Trading website.
Responsibility for capital items in residents' premises
The reforms prohibit operators from selling capital items to residents or attempting to pass on responsibility to individual residents for the maintenance and replacement of capital items in their premises.
Residents who have previously bought capital items in their premises from the operator or had agreed to be responsible for these items can notify the operator and pass responsibility back. This should be done as soon as possible. For more details refer to the Transfer of items of capital to village operator page on the Fair Trading website.
NOTE: This does not apply to premises owned by a resident in a strata, community or company title scheme.
Budget deficits
Other than in prescribed exceptional circumstances, village operators are required to make good any budget deficit at the end of each financial year. At the same time, operators have flexibility to vary expenditure between line items. Residents can be asked to fund a deficit only if it is caused by increases in certain costs specified in the Regulation. These are: utilities (except telephones), rates and taxes, award wages and salaries, urgent maintenance, and public liability and workers compensation insurance.
Urgent repairs
Residents have the right to carry out urgent repairs and be reimbursed if the operator fails to have the repairs done within a reasonable period after being notified. Urgent repairs are defined in the Act and include a gas leak, burst water service, blocked or broken lavatory, serious roof leak, dangerous electrical fault, serious storm or fire damage or other damage that causes an urgent safety or security risk.
Reducing compliance burden on smaller operators
Villages with an annual income of $50,000 or less are no longer required to have their annual accounts audited or provide quarterly accounts to residents, but only if residents agree.
In addition, residents in these small villages can consent to not being given a budget at the start of every year. It is anticipated that this will assist in reducing costs for smaller, volunteer run villages.
Improving the way residents committees operate
The maximum number of proxies any person may hold for voting at a residents committee meeting has been reduced from the 5 to 2. No resident will be able to hold the same position as an office bearer on a residents committee for more than 3 consecutive years. They will still be able to hold other positions on the committee and be eligible to return to their original position at a later stage. Residents are able to vote at meetings by written ballot and will be able to submit postal votes on special resolutions. These measures will make it easier for more residents to be involved in decision making.
Fixtures and alterations
Residents have the right to add or remove fixtures or make alterations to the premises with the consent of the operator, which can not be unreasonably refused.
Protecting refund entitlements
Residents who do not have an interest registered in the village land will have their refund entitlements protected and will be given priority over certain other creditors in the event that a village needs to be sold due to the insolvency of the operator.
Register of retirement villages
Existing and future village operators are obliged to notify the Government that the land is used as a retirement village. The information recorded will be used to establish a publicly accessible list of all retirement villages in NSW. The deadline for registration was 1 June 2010, however any operators yet to register a village should do so as soon as possible to avoid penalties under the legislation.
To register, village operators need to complete and submit a form (Request form 11RT) located on the Land and Property Information (LPI) website. For more information about the register and to access the Request form 11RT, go to the Retirement Villages page on the LPI website.
Disclosure to prospective residents
Operators will continue to be required to inform prospective residents by supplying a detailed disclosure statement.
Investigation and enforcement powers
The investigation, compliance and enforcement powers have been revised. The Director General will have the power to issue a public warning notice involving a particular operator.
Role of the Consumer, Trader and Tenancy Tribunal
The Consumer, Trader and Tenancy Tribunal plays an important role in the resolution of disputes that arise between residents and village operators. The Retirement Villages division of the CTTT can hear and determine applications about disputes between the retirement village operator and one or more residents. The types of orders that the CTTT can make include:
- village contracts
- village rules
- capital maintenance and replacement
- recurrent charges
- annual budgets and accounts
- payment of money and compensation
- termination and vacant possession
- security and safety
- sale or letting of premises.
For more information about the CTTT visit www.cttt.nsw.gov.au
Further information
If you have any questions about the rights of prospective residents, residents or operators under the Act contact the Fair Trading Specialist Support Unit on 9895 0297 or toll free on 1800 625 963.
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