The Housing Legislation (Building Better Futures) Amendment Act 2017 (“Act”) was passed by Parliament on 25 October 2017. It will have a major impact on Retirement Village documents and processes.
The Act is the result of a long and winding path of review of the law spurred recently by the infamous Four Corners Program on retirement villages.
It is fair to say that one of the major themes of the legislation is to standardise the contractual arrangements and to do that by reducing much of the paperwork in the RV sector to the ubiquitous government form. It introduces, for example, the following forms:
- Residence Contract;
- Prospective Costs document;
- Village Comparison document;
- General services budget;
- Transition Plan; and
- Condition Report.
The more specific issues of note are set out below.
Reinstatement of units
When ending residency, the unit must be left in the same condition it was in when the former resident started occupation of the unit, apart from fair wear and tear and any renovations carried out with the agreement of the resident and the operator.
The Act amends the definition of ‘reinstatement work’ removing references to restoring units to a ‘marketable condition’, and the general condition of other comparable units in a village.
These changes will only apply to new residents.
The Act addresses the issue of renovation work being undertaken to the former resident’s unit which is proposed by the operator. ‘Renovation work’ is defined to mean ‘replacements or repairs other than reinstatement work‘.
Before starting the renovation work, the operator and former resident must agree on a date by which the renovation work will be finished, and the work must be completed by the agreed date.
The cost of such renovation work must be paid by either:
- The operator and the resident, in the same proportion as the capital gain is to be shared (if the scheme operator and the resident are to share in any capital gain on the sale of the unit under the residence contract); or
- If the operator and the resident do not share any capital gain on the sale of the unit, then the scheme operator.
The Act does not set out to prescribe or limit the scope of renovation work determined by the operator. The Act appears not to contemplate disputes arising between operators and residents in relation to the scope of the work to be untaken. Instead the provision refers only to disputes regarding timeframes for the completion of renovation work. We hope for further clarity around this issue in due course.
These changes will only apply to new residents.
Compulsory buy back of units
- Unless the unit is resold beforehand, scheme operators must pay residents their exit entitlement 18 months after the resident leaves, unless doing so would cause the operator undue hardship.
- This amendment will apply to existing residence contracts including where a resident has already left a village. In the latter case, the 18 month period for payment of the exit entitlement will commence from the date of assent of the amendment, not the date of the resident’s departure.
Scheme operators are also required to maintain a village website.
The village comparison document (or a link to it) must be clearly displayed on any pages of the website which contain marketing material.
PIDs will be scrapped and the Act introduces the following:
Operators will be required to give prospective residents:
- A residence contract in the approved form within 7 days of a request from a prospective resident;
- The village comparison document in the approved form within 7 days of a request from a prospective resident;
- A prospective costs document in the approved form of a request from a prospective resident which summarises the cost of moving in, living in and leaving the village;
- A copy of any village by-laws for the village; and
- Any other document prescribed by regulation.
Existing residents PIDs will continue to be effective to the extent that legislation permits.
Condition report on entry
A resident must not be allowed to start occupying a unit until a condition report is completed:
- In the presence of the prospective resident (or without them present if they consent to be absent in writing) describing the condition of the unit;
- Signed by the operator and a signed copy given to the resident;
- The way that the condition report must be completed will be prescribed by regulation;
- Penalties apply for non-compliance;
- The condition report must be signed by the resident within 7 days of entry and if the resident disagrees with the report they should mark the report and indicate what they do not agree with;
- Reports must be kept for at least 2 years after the termination of the resident’s place at the village.
Condition report on exit
Within 14 days of termination:
- The Bill requires the scheme operator to complete and provide a former resident with a condition report at the end of residency;
- A penalty applies for non-compliance; and
- Reports must be kept for at least 2 years after the termination of the resident’s place at the village
Regulation of redevelopment of a Village while continuing to operate
The relevant sections of the Bill will not apply if all residents were given notice before entry in the documents provided to prospective residents of the running redevelopment.
- All residents must be given a proposed redevelopment plan; and
- Notice of at least 21 days must be given to all residents of the residents meeting regarding the redevelopment plan. At the meeting, residents should be asked to pass the redevelopment plan by special resolution.
- Failing approval by the residents, the scheme operator may apply to the Chief Executive seeking approval of the proposed redevelopment.
- The Chief Executive can decide to approve the plan or give written direction to the scheme operator to take certain action or revise the plan. If approved, the Chief Executive must give all residents written notice of the decision to approve as well as a QCAT information notice.
References to regulations and approved forms
There are various references to ‘approved forms’ and ‘regulations‘ throughout the Act. These have not yet been released. However, we will be providing regular updates as new information is released.
Clients need to be gearing up for the changes and obtaining advice on how they impact on your current documents and processes.
For further information about how these changes might affect you, please contact our Aged Care and Retirement Villages team at CRH Law on 07 3236 2900.