Submission cover sheet
- Name of organisation or individual making this submission
- Authorised delegate/contact person
General Manager Retirement Living
Questions on possible options
- Is the description of the ‘Sydney Metropolitan Area’ appropriate? If not, why not, and what areas should be included or excluded?
- Are the proposals for appointing a valuer, to determine the value of the property, necessary and appropriate?
Where the scheme operator and resident are unable to agree on the market value, then an independent valuer should be appointed. If the scheme operator and outgoing resident/substitute decision maker cannot agree on the independent valuer, who then appoints the independent valuer and is this appointment binding on both parties? Note that many operators already engage a valuer as well as experienced sales managers who collaboratively establish the market value based on local environment. This is then communicated to and discussed with the outgoing resident/substitute decision maker (attorney) and agreement established on market value for sales. Retirement Villages are a unique property proposition and operators to date have always engaged valuers with significant experience and modeling expertise to determine market fluctuations and movement. Any appointment of an independant valuer should ensure that extensive experience and qualifications in the retirment living industry is a priority for establishing fair and equitable valuation.
- 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?
Where a resident opts out of 6 or 12 month maximum period (whichever applies), the 42 day cessation of weekly fee payments should not apply. Potentially the scheme operator could suffer financial hardship since they are not permitted to sell the residence even if there was a buyer, yet they would still have to pay the weekly fees until such time as the unit is sold.
- 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?
Current vacancy rate in the RV; house prices in the local area; marketing and advertising activities; whether resident has enabled the residence to be upgraded to marketable standards; whether asking resale price actually meets the market demands; number of offers the exiting resident/substitute decision maker has declined. If an external real estate agent has been engaged by the outgoing resident for the purposes of selling the property in a retirement village, the operator should not be penalised for failure to secure a new buyer, where it does not hold control of the sales process.
- Are there any additional circumstances the Tribunal should be able to take into account when considering a hardship application from an operator?
Size of the operator; location of the village, local economics and recent natural disasters
- Are there any other factors that could affect the setting of a ‘trigger point’?
When does vacate the premises start? is it when the resident exits the residence, or when the key is returned, or upon completion of unit renovations/upgrade. What is the definition of vacancy?
- 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?
Provisions for South Australian residents would be of benefit rather than the Victorian provisions. Where a resident enters a RAC, the ability to sell the residence by the resident/their substitute decision maker should not apply. To grant the outgoing resident the ability to delay selling their residence whilst they are awaiting a better price and to request the scheme operator pays their RAD/DAP could have significant financial impacts on the operator.
- Can you think of any other benefits or costs of this proposal? What are they?
- 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?
A definition of the term vacates the premises must be included. When does vacate the premises start? is it when the resident exits the residence, or when the key is returned, or upon completion of unit renovations/upgrade. What is the definition of vacancy?
- Should one or both of the proposals be ‘grandfathered’? If not, please provide your reasons.
- Please provide any further comments on the reforms.
Concern expressed that smaller operators that the ability to loan more from the bank would reduce as business value would be dropped. This would affect the ability to buy back within the time frames suggested (6 or 12 months). The 42 day period disadvantages RV operators especially when compared with body corporate fees paid for by non-RV residents. In the latter, the former resident continues to pay for utilities such as rates until such time as the unit is sold. This same premise should be applied to RV. A percentage of the full fees should be charged to cover such items.