Submission cover sheet
- Name of organisation or individual making this submission
Leading Age Services Australia - LASA
- Authorised delegate/contact person
Principal Advisor - Retirement Living & Seniors Housing.
Leading Age Services Australia - LASA
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?
LASA believes the extension of metropolitan boundaries north beyond the central coast and south to include the Blue Mountains is too far reaching. These areas have very different market conditions and struggle with valuations and sales and introducing a 6 month buy back to these areas is almost terminal for their future existence and sustainability. Reasonable metropolitan boundaries may be a 20km radius around the Sydney CBD.
- Are the proposals for appointing a valuer, to determine the value of the property, necessary and appropriate?
Appointing a valuer is appropriate when an operator and a resident cannot agree on a re-sale price. Not all valuers understand how to value a retirement village. The necessary skills, knowledge and more-so experience should be mandatory given its specialisation. There should always be an open door to NCAT, (no limitations) should there be concerns with the valuation or the expertise of the valuer.
- 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?
LASA is concerned with a conflict of interest whereby the outgoing resident chooses to sell the unit (controlling the process and timing) and still has access to the buy back option. Residents (or Estates) wishing to control the sale should not have access to a buy back provision as long as they control the sale. Should they wish to hand back the sale process to the operator they should do so in writing and then the clock will start ticking for the buy back option.
- 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?
A hardship provision is necessary but also a catch 22 for operators. As soon as an operator is on the public record as having claimed hardship, consumer confidence (residents) will not head their way. Banks will not lend and prices will decline. This inadvertently will affect resident valuations and we now have a lose-lose situation and will likely see more operators going out of business and villages going into receivership. Other considerations will be the sales history, location, competition, reputation, and their marketing documentation.
- Are there any additional circumstances the Tribunal should be able to take into account when considering a hardship application from an operator?
LASA believes there should be recognition for operators with both registered and non-registered interest holder contracts having access to hardship protections.
- Are there any other factors that could affect the setting of a ‘trigger point’?
There needs to be a clear trigger for the buy-back clock commencing. LASA believes it should not start ticking until: 1. The resident has given the appropriate notice (or have passed away). 2. The unit must be fully vacated, including all goods and chattels. 3. The key has been returned. 4. The unit has been refurbished and ready to market 5. An agreed valuation has been obtained.
- 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?
LASA believes Introducing an aged care payment rule similar to SA would be a preferred position over the 6 and 12 month buy back provision. This is a sensible approach that is a win-win for residents and operators. 18 months is a sensible safety net
- Can you think of any other benefits or costs of this proposal? What are they?
Impacts: Reputational damage and decline in the industries ability to flourish. The pendulum has swung so far that the over regulation will inhibit growth, reduce valuations and see more operators seeking hardship, or receivership, in the years ahead. These are extreme costs to an industry that should be serving our senior Australians into the future as we see our population over 65 years of age growing rapidly.
- 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?
The Trigger as previously stated should be the same for either buy backs or for the clock commencing on the 42 day cessation of recurrent charges. In many cases the operator is not dealing with the sensible resident that signed the contract many years ago; they are dealing with emotional, selfish family members who dont understand, nor wish to understand, the contract arrangement and refurbishment responsibilities (if in contract) that their parents willingly and knowingly understood and entered into. They therefore delay proceedings and unfairly delay the opportunity of the operator to sell the unit. The trigger should be when all of the following have been completed: 1. The resident has given the appropriate notice (or have passed away). 2. The unit must be fully vacated, including all goods and chattels. 3. The key has been returned. 4. The unit has been refurbished and ready to market 5. An agreed valuation has been obtained. Again, should the resident or family wish to control the sale process they should continue to pay recurrent charges (just as you would pay rates and other costs in the community while selling a property) indefinitely. Should they wish to hand back the sale process to the operator they should notify the operator in writing and then, if all of the above conditions are met (1-5) then the clock for buy backs and 42 days cessation of fees commences.
- Should one or both of the proposals be ‘grandfathered’? If not, please provide your reasons.
LASA is adamant that these reforms should not be retrospective and current residents contracts and applicable legislation as and when they entered should be grandfathered. The reasons have been stated previously in this submission being the hardship such provisions will impose on small operators. The large groups such as Lendlease, Aveo, Stockland (although still impacted) have large balance sheets that can sustain buy backs at 6 months. Small stand-alone operators do not have this capacity. Current market conditions are not favourable for quick sales or increased valuations. Banks will not lend to any operator in NSW seeking hardship protections.
- Please provide any further comments on the reforms.
The consequences of such provisions will see operators seek developments and acquisitions in QLD or SA where the 18 month buy back safety net is more reasonable. As at the date of this submission (16/8/19) media and economists are speaking of the potential of economic recession. We are in tough times in our sector (with more potentially on their way) and there are small fires burning and the NSW government is about to throw on the petrol. We truly hope this consultation/discussion feedback is seriously considered and suggested pathways taken; and not just a process to humor the sector.