Canberra retirement village operators are set to benefit from the new Retirement Villages Amendment Act 2016.
- 100% refundable deposits cut back
- Dispute committee step before tribunal
- Budgets no longer CPI linked
- Marketing OK pre DA approval
The changes mean village operators can now enter into more binding holding deposit arrangements with prospective residents, and may retain “reasonable costs” incurred from leaving the unit empty if a prospective resident decides not to move.
Erik Boddeus, Chairman of the Property Council’s ACT Retirement Living Committee and National Retirement Manager at Hindmarsh, tells us these costs will be set at a maximum of $10,000 unless the regulation prescribes a different number.
“In situations where residents can no longer live independently or dies, we would be happy to give deposits back but if they change their mind for another reason, we now have the opportunity to retain part of the deposit so we can recover our costs if a unit has been taken off the market for a particular time,” he says.
Previously, prospective residents could put down a deposit of as little as $1,000 or up to 10% of the value of the property, knowing their money would be fully refunded if they chose not to proceed.
The amendment also sees the re-introduction of an internal dispute resolution process for residents that sets up disputes committees. They must include one member appointed by the residents, one member appointed by the operator and a mutually agreed chair.
The link between CPI and villages’ operating budgets and increases in fees has also been removed to reduce friction between operators and residents.
Previously, if budgets were at CPI, operators did not have to consult residents to increase fees if they were at or below CPI.
“The issue we were facing with operating budgets was that 40% of our costs relates to salaries and wages and another 30 to 40% on utilities, rates and insurance,” Erik says. “These are usually out of step with CPI, which has had a 7 to 12% per annum increase over the last few years in Canberra.”
Now operators will have to ask residents for approval on operating budgets and any increase in recurrent charges.
Operators also have the go-ahead to begin marketing a new village prior to development approval being attained, including issuing promotional material and taking expressions of interest.
The changes followed a review of the current Act led by an advisory group of industry stakeholders including the Property Council, ACT Retirement Village Residents Association, COTA and Human Rights Commission.
