Retirement village laws and inquiry

Reforms arising from the Inquiry into the NSW Retirement Village Sector

Retirement village laws

The NSW Parliament passed the Retirement Villages Amendment Bill 2018 in November 2018.

The changes to the Retirement Villages Act 1999 are designed to better protect residents and prospective residents of retirement villages. They also act on some of the recommendations of the Inquiry into the NSW Retirement Village Sector led by Ms Kathryn Greiner AO. People who live in, work in and run retirement villages were consulted extensively as part of the review.

What are the reforms and when do they start?

The reforms aim to improve protections for current and prospective retirement village residents. They aim to do this by increasing transparency, improving dispute resolution, giving more certainty around costs and strengthening safety and emergency planning and procedures.

These reforms will to start on 1 July 2019:

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. You can subscribe to our What's New eNews for updates.

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

Annual contract ‘check-up’ meetings

Residents will now 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 will be able to attend the meeting with the resident to give them support or assistance. Residents will also be able to nominate one or more people to represent them at the meeting if they cannot attend.

At the meeting, operators will have to provide a verbal and written summary of all of the costs involved if the resident was 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 fixed early.

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
  • estimate of what the resident would receive after leaving the village after they have paid all fees and charges.

Any estimates provided by the operator at the meeting must be reasonable and take into consideration factors that may influence the estimate, such as the features and characteristics of the resident’s unit. Fair Trading will have powers to require operators to prove any estimates they give are reasonable, with penalties of up to $22,000 applying for non-compliance.

Emergency plans

Operators will be 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 must be tailored to the village. It must take into account 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.

Annual emergency evacuation exercises

At least once a year, operators will have to run an evacuation exercise for residents. This new obligation directly responds to the concerns of many residents raised during the Inquiry. It will help to make sure that all residents are familiar with emergency protocols and are able to safely evacuate if they need to.

Key safety information

Operators will 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.

Rules of conduct

The reforms establish new powers to prescribe mandatory rules of conduct for operators of retirement villages. The rules of conduct may be about professionalism, training, skills, performance and behaviour that people managing or operating retirement villages must have. This includes:

  • knowledge of the Retirement Villages Act 1999 and Regulation, the strata laws and any other laws that affect the operation of a retirement village
  • conduct when dealing with both prospective and current residents
  • conduct when marketing retirement villages
  • ways to solve disputes within villages
  • training and skills of operators and their staff.

These rules will be enforceable and penalties may apply for not following them.

The rules of conduct will be developed over the coming months and prescribed in the Retirement Villages Regulation following consultation with residents and industry.

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
  • maintenance and replacement requirements of items of capital.

Further detailed requirements for the asset management plan will be developed over the coming months and prescribed in the Retirement Villages Regulation following consultation with residents and industry.

New village auditor appointment process

The reforms will require operators to get 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.

In cases where residents do not agree with the auditor suggested by the operator, they will be able to suggest an alternative. This will help to make sure 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 will not be allowed to make an order in the operator’s favour unless it considers there are exceptional circumstances for doing so.

Better information about retirement villages in NSW

The reforms will give Fair Trading the power to collect key retirement village sector data from operators, as well as more power to publish that information.

Key data may include the number of units in a village, management details, information about complaints and the types of contracts on offer.

This reform will support Fair Trading’s work as the industry regulator to monitor and check on what is happening in retirement villages and better inform consumers about the retirement village sector.

Mediation of disputes

The reforms provide new powers relating to the mediation of disputes arising under retirement village laws. This includes the power to prescribe circumstances where mediation will be a mandatory step before progressing to the Tribunal.

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. The inquiry 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 to improve the legislative framework for retirement villages in NSW.  The 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).

The Greiner Review Report further recommends improving Fair Trading’s administrative and operational practices in the retirement village sector.

The NSW Government supports the findings and recommendations in the Greiner Review Report. To implement the Greiner Review Report, it will make reforms to afford greater protections to consumers. These reforms will aim to:

  • increase transparency
  • improve certainty around costs
  • enhance operator accountability
  • improve dispute resolution, and
  • strengthen Fair Trading’s role as the regulator of retirement villages in NSW.

The Government is progressing the proposed reforms outlined in its response, and will consult on any significant proposals as they are developed.

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

Background to the Inquiry

The Inquiry reviewed the protections offered to residents and the opportunities to improve Fair Trading’s administrative and operational practices that could help address unfair practices in the sector.

The Inquiry also looked at the fairness and transparency of business practices, including:

  • transparency and honesty of marketing activities
  • clarity of fees and contractual rights and obligations for prospective residents and their families
  • suitability and fairness of village maintenance and operational practices to maintain resident safety
  • availability and cost-effectiveness of dispute resolution mechanisms
  • fairness of arrangements to levy maintenance fees to maintain the village and address building defects.

Download the formal terms of reference for the inquiry.

Submissions to the Inquiry

Submissions closed on 31 October 2017.

The Inquiry into the NSW Retirement Village sector received almost 500 submissions during public consultation and all were considered.

Many organisations and individuals provided considered comment that greatly assisted the Inquiry.

While all submissions have been carefully considered, only those received from industry and resident groups and associations have been published.

No submissions from individuals have been published due to the personal, and sometimes quite sensitive, nature of the information

Community forums

During the consultation program, residents and members of the community were invited to attend consultation forums to discuss their concerns at locations across the State. The forums were held in Sydney, Hornsby, Ballina, Parramatta, Port Macquarie, Newcastle, Wollongong, and Wagga Wagga during October 2017.

View a summary of issues raised at the community forums below:

These summaries are issues raised by participants during consultation and do not reflect the views of the NSW Government.

Privacy and personal information

Personal information collected as part of the submission process is handled in accordance with the NSW Privacy and Personal Information Protection Act 1998, which regulates the collection, storage, access, amendment, use and disclosure of personal information. Visit our privacy page for more information. Fair Trading may in some circumstances be required by law to disclose your submission, including personal information to third parties.

Submissions, in part or in whole, may be made publicly available on our website or in in reports, or other documents produced by the Inquiry. Please tell us if you do not wish for your submission to be made public.

Complaints

If you have an enquiry or complaint about a retirement village, you can lodge a complaint or contact Fair Trading on 13 32 20.

 
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