Changes to retirement village laws

Retirement village residents and their families will be better protected under new legislation that passed Parliament in November 2018.

The Retirement Villages Amendment Act 2018 responds to a number of recommendations made by Kathryn Greiner AO, following her independent inquiry into the retirement village sector which ran between August to December 2017. The inquiry was ordered by the NSW Government after a series of reports of alleged misconduct in the sector.

The key changes, which commence on 1 July 2019, include:

We explain these key changes in more detail below.

The rest of the reforms were proclaimed on 8 February 2019  but need regulations to be developed before they can start. We will provide more detailed information for operators and residents before these changes apply. Please provide your details to rvambassador@customerservice.nsw.gov.au for updates. 

The Government will continue to consult all stakeholders as the regulations are developed, including about when each reform should start.

Guidelines for operators

Guidelines have been provided by the NSW Fair Trading Commissioner under powers established by the legislation.

They provide plain English direction for operators and residents on appropriate ways to comply with the requirements and key changes established by the Amendment Act. They include:

The guidelines were developed in consultation with residents and industry.

The NSW Civil and Administrative Tribunal (the Tribunal) may take these guidelines into account to determine if operators have complied with the requirements of the Act.

Annual contract ‘check-up’ meetings

Residents have the right to meet with their village operator once a year to discuss their contract and get a better understanding of the process involved when leaving the village, including any fees and charges payable.

Family, friends or advisors may attend the meeting with the resident to give them support or assistance. Residents may also nominate one or more people to represent them at the meeting if they cannot attend.

At the meeting, operators need to provide a verbal and written summary of all costs incurred if the resident were to leave the village, based on the terms and conditions of the resident’s contract. This tailored information will help residents better understand what’s involved when exiting the village and allow any concerns or questions to be addressed.

The following information must be provided at the meeting:

  • a resident’s rights and obligations in relation to leaving the village
  • estimated departure fee (if applicable)
  • estimated fees and charges involved with selling the unit
  • estimated sale price or estimated ingoing contribution of the next resident, as applicable to the resident’s contract
  • estimates of any other fees or charges that apply when leaving the village (including an estimate of any capital gain shared with the operator)
  • how long recurrent charges may be payable after leaving the village
  • estimate of the final monies a resident would receive upon leaving the village, after they have paid all fees and charges.

Any cost and other estimates provided by the operator at the meeting must be reasonable. They must take into consideration factors that may influence the estimate, such as the features and characteristics of the resident’s unit. A reasonable estimate will ultimately depend on the circumstances of each resident.

Significant penalties can apply for operators who provide unreasonable estimates.

Further information can be found in the village contract information meetings guideline.

Emergency plans, evacuation exercises and safety information

Operators are required to prepare and maintain an emergency plan for their village and make sure that residents and staff are familiar with the plan.

The emergency plan should be easy to understand and tailored to the village. It must tailored to the factors that may affect the response to an emergency in the village, including:

  • the size, location and layout of the village
  • the number of residents in the village
  • the needs of residents with mobility, hearing, visual or other impairments.

The operator must review their emergency plan at least every 12 months.

At least once a year, operators must carry out an evacuation exercise. They are responsible for making sure that all residents are familiar with emergency protocols and are able to safely evacuate if they need to.

While operators can't force residents to participate in annual evacuation exercises, they should seek to actively promote participation. The greater the participation, the more prepared the village will be in an emergency.

Operators will also have to display key safety information in communal areas within the retirement village, including:

  • a map showing the location of assembly areas, exits, fire extinguishers and any other emergency equipment
  • instructions on how to evacuate in the event of a fire or other emergency

Operators will also have to provide this information to each resident, tailored to their specific unit in the village.

These obligations respond to the concerns of many residents raised during the Inquiry.

Further information can be found in the emergency plans and evacuation exercises guideline.

Appointing an auditor

Operators must obtain residents’ consent each year before appointing a person as the auditor of the accounts of the retirement village.

For most villages, approval of the auditor will be sought at the same time as the village budget.

Where residents do not agree with the auditor suggested by the operator, they may suggest an alternative.

This will help to ensure residents have a say in who examines how the operator is using the money that residents pay as recurrent charges.

Where the operator does not agree with the alternative auditor suggested by the residents, the operator will need to apply to the Tribunal for an order.

However, the Tribunal cannot make an order in the operator’s favour unless it considers there are exceptional circumstances for doing so.

Further information can be found in the annual auditing of accounts guideline.

Rules of conduct

The Amendment Act established powers to prescribe mandatory rules of conduct for operators of retirement villages. On 1 July, rules of conduct came into effect under the Retirement Villages Amendment (Rules of Conduct) Regulation 2018.

The rules of conduct establish a benchmark for the conduct and behaviour of operators. They aim to improve accountability and provide greater peace of mind for residents when it comes to the behaviour and conduct they can expect from operators.

The rules prescribe mandatory minimum standards for:

  • knowledge of relevant legislation
  • conduct when dealing with both prospective and current residents
  • honest and ethical practices when marketing retirement villages
  • ways to solve disputes and handle complaints within villages
  • reporting and management of conflicts of interest
  • the training and skills of operators and their staff
  • interactions with external selling agents when selling a residence.

The offence provisions within the Rules will commence on 1 January 2020.

The rules of conduct are enforceable and significant penalties may apply if operators fail to comply.

Free on-site mediation

The reforms provide new regulatory powers relating to mediating retirement village disputes. This includes the power to prescribe circumstances where mediation will be a mandatory step before progressing to the NSW Civil and Administrative Tribunal (NCAT).

Find out more about retirement village disputes.

Asset management plans

Operators will have to maintain an asset management plan for the village’s capital items and make the plan available to current and prospective residents.

The information in the asset management plan will need to include:

  • costs associated with both maintaining and replacing items of capital
  • reasons for decreases or increases in costs
  • how often costs are incurred and the expected lifespans of items
  • maintenance and replacement requirements of items of capital.

About the Inquiry into NSW retirement villages

As part of its four-point plan to improve retirement village living, the NSW Government commissioned Kathryn Greiner AO to lead an inquiry into the state’s retirement village sector. It was completed between August and December 2017.

The Inquiry into the NSW Retirement Village Sector Report (PDF, 3583.78 KB) (the Greiner Review Report) outlines the Inquiry’s findings and recommendations

This Inquiry found that the operation of the retirement village sector could be improved in three key areas:

  • increasing transparency of exit fees and contracts
  • clarifying the funding arrangements for ongoing maintenance costs which are shared between residents and operators
  • providing more support when disputes arise (and reducing the potential for disputes arise).

Read the Government response to the Greiner Review Report (PDF, 339.02 KB).

Download the formal terms of reference for the inquiry.

Kathryn Greiner was appointed as the NSW Government’s Retirement Village Ambassador.  She travels the state talking to residents and prospective residents about their rights and retirement village living.  See our Retirement Village Ambassador page for more information.

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