Submission cover sheet
- Name of organisation or individual making this submission
- Authorised delegate/contact person
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?
State based metrics
- Are the proposals for appointing a valuer, to determine the value of the property, necessary and appropriate?
The use of a valuer is essential in providing a mechanism for determining a fair market value for the property which is removed from the entry price. Which party bears the cost of the valuation needs to be clearly understood. Who is responsible for the timeliness of the valuers report. How will valuers be informed about actual genuine arms length market transactions, as opposed to simply a thesis of RV unit value prescribed by valuers.
- 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?
Providing the resident or those managing their interests an opportunity to opt out on the basis of deriving a higher sales price should be an option they agree to upon entry or as a process aligned with determining the exit date. Consumer choice must be maintained.
- 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 market forces; realistic pricing and marketing; presentation of the unit
- Are there any additional circumstances the Tribunal should be able to take into account when considering a hardship application from an operator?
Liquidity; current market forces and whether the unit has been priced and marketed fairly; costs incurred to date by the operator. The liquidity issue is key and any gap is unlikely to be filled by the debt market especially if there is an overall downturn in the property market. All the risk would transfer to the operator which will no doubt make some businesses unsustainable.
- Are there any other factors that could affect the setting of a ‘trigger point’?
- 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?
The VIC concepts of a trigger to release funds for residential aged care are beneficial as discussed further later.
- Can you think of any other benefits or costs of this proposal? What are they?
The six month compulsory buy back would impact on the current DMF structure and would reduce the likelihood of operators offering a share of capital gains. The regime would create a structure similar to the Refundable Accommodation Deposit scheme which operates in Aged Care. The only change would be in the instance where the market has shifted as such to provide a sale price lower than the entry price whereby the valuation of the unit would determine the price used for buy back. The requirement for an independent valuer will be costly to the consumer and potentially erode the value of their asset.
- 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 upon the agreed exit date (which could be settlement of the unit not just vacant possession)
- Should one or both of the proposals be ‘grandfathered’? If not, please provide your reasons.
Both proposals should be grandfathered with existing residents been subject to the contractual obligations under which the unit was purchased.
- Please provide any further comments on the reforms.
The compulsory buy back scheme with the six month timeframe will distort the market and create negative behaviours that impact on both parties. It is a significant change that is not reflected in the commercial assessments for existing villages and the arrangements for current residents should be managed under the contract that was agreed at the time of entry. Consideration needs to be given to a model such as Greengates integrated retirement living and aged care offering which would enable the seamless transition of the resident into aged care with the easy transition of the equity in their unit moving to the RAD contribution in aged care.