Retirement villages: urgent reform needed
Slammed as a “lifestyle choice that requires a lawyer”, it’s very much buyer beware when thinking of buying into a retirement village
Key Points
- Seniors and families complain of being “ripped off” by unfair and incomprehensible contracts and conditions
- Reform, standardisation and transparency needed to better protect older people
- National Seniors calls for urgent reforms to sector including national consistency led by federal government.
The retirement village sector needs urgent reform and regulation to better protect older Australians against unfair and incomprehensible contracts, fees, and charges.
That is the strongly worded key recommendation of the National Seniors Australia submission to the Victorian Review of that state’s Retirement Villages Act.
Importantly, we are calling for nationally consistent and strengthened laws governing retirement villages across all states and territories.
Older Australians fed up with confusing laws want federal Housing Minister Julie Collins to show leadership, bring the states and territories together and demonstrate support for older Australians.
Speaking to David Bevan on ABC radio in Adelaide, National Senior’s Chief Advocate Ian Henschke said the retirement village sector is a minefield for many retirees and their families who are confronted by incomprehensible contracts that can mask the financial interests and responsibilities that consumers take on when entering and exiting the village.
Concerns over exit fees and sale delays
Operators continue to undervalue entry costs and obscures exit costs to lure unsuspecting seniors. Many are later “hit” with fees and charges – the full cost of which is not easy to understand without costly legal and financial advice.
Delays in the resale of properties result in ongoing costs to former residents or their families – a big problem when a resident is required to enter an aged-care facility.
Time limits for buy backs should be shortened to 6 months in metropolitan areas; 12 months in other areas.
It is unconscionable an operator would be given 12 months to sell a property in a metropolitan area after the resident gives vacant possession. Twelve months provides no incentive for an operator to act quickly to sell a property.
Operators pay the exit entitlement on the day after the specified period, and be obliged to:
- give a vacating resident a statement with the amount of their exit entitlement and how it was calculated, and
- make an aged care payment or alternative accommodation payment within prescribed periods after a resident makes a request.
Reforming retirement villages is part of National Seniors Better Housing campaign. To support this, sign up to the campaign or become a National Seniors member.
“As Australia’s peak body for older people, National Seniors regularly hears about the frustration at the lack of consumer protections in retirement villages.
“People contact us with a deep sense they are or have been ripped off and are not being protected by local laws and at the mercy of retirement village marketing people and lawyers,” Mr Henschke said.
Even residents who have had an enjoyable experience in a retirement village are surprised and disappointed at unforeseen fees and conditions that limit the sale returns and add unforeseen costs upon exiting the village.
National Seniors says seniors are not legal experts and need government action and greater transparency between operators and residents to rebalance the relationship so older Australians can feel confident they are not being taken advantage of.
What is particularly worrying is that seniors might feel they are protected because retirement villages are covered by specific legislation.
Speaking on Adelaide radio, where seniors and family members talked about their personal experiences, Mr Henschke said: “The retirement village market should be reformed to resemble the residential property market, where the owners have greater control over the private areas of their unit and process of reselling. We need nationally consistent laws.”
National Seniors supports the advantages of downsizing, enabling older people to better manage their retirement years.
However, we do not believe the current fragmented, and unregulated retirement village business model makes it a suitable downsizing option despite the possible benefits of this type of tenure.
Retirement villages have the potential to give older Australians a comfortable lifestyle option, which is more suitable as people age, but this promise has been lacking because the legislation has enabled practices that are detrimental to the financial wellbeing of seniors.
We urge a strong “buyer beware” approach to retirement villages. This is disappointing given that retirement housing could play a stronger role in addressing some of the factors fuelling the housing crisis.
National Seniors’ submission to the review of Victoria’s Retirement Villages Act can be read on the website.
