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Dr Andrea Blake and Dr Lucy Cradduck. Photo: QUT

Transparency, simplicity should underpin retirement village laws

There needs to be more transparency and simplicity in the retirement village sector. This was the crux of senior law lecturer Dr Lucy Cradduck’s verbal submission to the 2007 Standing Committee on Legal and Constitutional Affairs’ inquiry into older people and the law. Ten years on, not much has changed.

Cradduck said, currently, a standard Queensland retirement village public information document (PID) might reach at least 70 pages, which is more akin to a commercial lease.

“It is intimidating,” she said. “I think the one thing that shines through is there needs to be greater levels of transparency and simplicity. The documents themselves need to be easier to engage with. They need to be shorter and reflect the fact you’re living in your own home.”

There also needs to be a mechanism for easy comparison between retirement village operators and documents without the need for the consumer to contact them to send through information, she added. “Some villages do have some fees and percentages available, but you cannot easily find what the document is that you would need to enter into, rather, a statement on the website to the effect of, ‘please leave your details and we will contact you’. Then this is where it’s the emotional sell to you of living in your own home. Lots of people don’t do the background research before they start looking at villages, some with lots of services, and they can lose their heart to these places.”

Cradduck said a standard form contract will go a long way to empowering prospective residents and their families by enabling them to easily compare and interpret the fine print across villages.

Recently, Queensland premier Annastacia Palaszczuk called for an urgent review of the state’s retirement village laws.

Palaszczuk said the Queensland government will introduce laws that would require simplified, standard contracts, require ongoing fees and charges to be clearly declared upfront, introduce a minimum 21 days required to evaluate the contract before signing, make exit fees and payments and preparing a unit for resale fairer, implement dispute resolution processes, and introduce enforceable behaviour standards for village operators.

She said she wants these changes to take effect before the end of the year.

Cradduck’s QUT colleague and property economist Dr Andrea Blake said the review has been too long in coming but that Queensland is finally taking a significant step to make processes easier for current and future residents.

Blake and Cradduck made clear the changes they believe need to be made in their submission to the Queensland Governments’ 2012 Review of the Retirement Villages Act (RVA) 1999. Their recommendations were to amend the RVA to:

  • Prescribe a shorter and easier to understand format for PIDs, with the tenure [i.e. freehold/leasehold/licence/other and term as applicable], any participation in capital gain/loss and exit fees being clearly stated.
  • Require a copy of the lease/licence and/or other accommodation terms or RV rules attached to the PID, or otherwise to form part of it, be provided as clearly identified separate documents.
  • Require that legal and financial advice must be obtained by prospective residents before entry into any RV agreement; with confirmation of receipt of that advice to be provided to the RV operator prior to signing of any agreement. The consequence of a failure by the RV operator to obtain such documents could be that the RV operator would be precluded from charging an exit fee to the resident. The onus being for the RV operator to show advice was provided to the prospective resident at the relevant time.
  • Prohibit RV operators from passing on any costs associated with the RV agreement (other than the actual Titles Office registration fee for a resident’s lease) to the resident.
  • Require any RV with a website must make a copy of its current PID freely accessible online.

Minister for aged care Ken Wyatt recently announced the federal government is making regulatory framework for retirement villages a priority, and added the Government will take into account the recommendations of the 2007 parliamentary inquiry, in consultation with the states and territories, and the retirement sector.

Cradduck said this is a golden opportunity for not just Queensland and the Commonwealth, but all other states, to get together to work out a way forward Australia-wide.

“It needs to be remembered that the state systems are the ones that have the legislation in place at the moment, not just for retirement village operators, but for other levels of accommodation and land laws, generally, and all of these laws tend to be only state-specific or territory-specific laws,” she added. “So, yes, the commonwealth should be taking the lead, but you cannot leave the states out of the discussion. Importantly, these are issues for all Australians.”

Click below to hear Cradduck’s suggestions for consumers thinking of entering the retirement village market. Note: these comments are not a substitute for getting independent legal advice and financial advice targeted to your specific needs and circumstances.

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One comment

  1. Is there a typo in this article? At the end of the third paragraph inferring that you own your own home? I thought the whole idea of transparency was to show you don’t own your villa, just the right to live in it. See from FAQ: https://www.retirement-communities.com.au/community-news/retirement-village-guide/frequently-asked-questions

    Do I own my Retirement Village accommodation?

    When you move into a retirement village as a resident, you are most commonly buying a right to occupy and enjoy your accommodation and the use of communal facilities such as a community centre or clubhouse, BBQ areas, sporting facilities such as a bowling green, swimming pool and gymnasium, library, community gardens, internet lounges, meeting rooms, lounge and dining rooms and parking for visitors. Depending on the legal structure / contract you are agreeing to, you will either be entering into a leasing arrangement or an ownership title of varying kinds.

    The most common forms of retirement village accommodation contracts are loan, licence and leasehold. This means you do not ‘own’ a separate title that can be sold, transferred or bequeathed.

    Freehold, unit trust, strata title and company share are on offer but are rare.