Retirement village exit entitlements and recurring charges cap

Submission cover sheet

  • Name of organisation or individual making this submission

    Anonymous

Questions on possible options

  1. Is the description of the ‘Sydney Metropolitan Area’ appropriate? If not, why not, and what areas should be included or excluded?

    I believe the metropolitan areas of Newcastle/Lake Macquarie should be included as these have similar amenities to Sydney with the availability of hospitals and other services, and there is high demand for retirement villages, and there should be no problem with the sales of residences in this area for an operator. Indeed, Lake Macquarie Council has been very vocal in ensuring that new developments are approved in the suburbs of Warners Bay, Belmont and those on the eastern side of the lake, close to Newcastle.

  2. Are the proposals for appointing a valuer, to determine the value of the property, necessary and appropriate?

    Yes.

  3. Where residents wish to sell their residence on their own terms, under what circumstances should they be able to opt in or opt out of the exit entitlement provision?

    Residents should be able to opt in again, particularly as they may find that promises made by a real estate agent are hollow. The general practice around here seems to be that the operator will sell the residence, but there are concerns about delays, particularly when the operator is selling new and previously unoccupied units for which he is liable for the recurrent charges.

  4. What issues should the Tribunal take into account when considering whether or not the operator has done everything in their power to enable the sale of a premises?

    1. Are there similar units for sale in the village, or the prospective village ? 2. What advertising, if any, has the operator undertaken ? 3. As the operator only has to take a non-binding deposit from a propective buyer, operators tend to stop chasing other interested parties. For example, one villa for sale here has fallen through two or three times at the last minute. The "owner" is probable still paying recurrent charges, and certainly has not received and exit entitlement.

  5. Are there any additional circumstances the Tribunal should be able to take into account when considering a hardship application from an operator?

    No.

  6. Are there any other factors that could affect the setting of a ‘trigger point’?

    When the resident leaves the village would be the primary trigger point here. Affecting this would be any renovations, repairs that need to be done. These should be quantified in writing by the operator, and a timeframe for their completion agreed upon. There is certainly latitude for delays by an operator in this area. As most of the villages in our area are marketed by the operator, then it is important to make sure they do this in a timely manner.

  7. Would any of the current provisions in Victoria and South Australia as set out in Appendix A (in the discussion paper), be of benefit to NSW residents of retirement villages?

    Many villages in our area advertise "ageing in place" without having any connection to nursing homes. Therefore, if a resident is required, either by desire, or by Social Services to move into a nursing home, then consideration need to be made to either defer payment to the nursing home until the exit entitlement is paid, or for the operator to bring forward payment. In fairness to the operator, who though in many instances holds all the cards, dferment of payment to the nussing home would be the best option, but a combination of both to prevent any unscrupulous operators deferring payment for as long as they feel. I think the SA legislation looks fairly good. Yes, to both registered and non-registered interest holders.

  8. Can you think of any other benefits or costs of this proposal? What are they?

    Profits to operators in the Newcastle area are quite generous, as the original intention of Reitrement Village legislation was for operators to forego some of their immediate profit, and recoup this later as part of the exit fee. Demand has seen operator profit in the metropolitan areas grow significantly, to the point where an operator in our area can look at a profit in building and initially selling at 50% plus. This combined with the 35% exit fee makes it a very attractive propositon to develop a village and on-sell it at a later date. These figures are not fiction. They are exactly as forecast in the additions to a village in our area. However, as this is primarily a case of supply and demand with the operator charging what the market can bear, it is outside of government responsibility. However, it must be taken into account, especially where villages in existing fully serviced areas with all amenities are concerned.

  9. As with residents with a non-registered interest, should the ‘trigger’ to commence the 42-day period begin when the resident permanently vacates the premises?

    Yes.

  10. Should one or both of the proposals be ‘grandfathered’? If not, please provide your reasons.

    Yes.

  11. Please provide any further comments on the reforms.

    This reform should not affect developers desires to build more retirement villages, as they are a very attractive and profitable propositon for a developer to build, run for several years to enjoy any exit fees, and then onsell to investors or pension funds who find them having a solid income stream.

At our discretion we may remove parts of submissions because of length, content, appropriateness or confidentiality (privacy) reasons.

Website https://www.fairtrading.nsw.gov.au

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