Sting in the tail for Victorian retirees

Sting in the tail for Victorian retirees as the Jacinta Allan Labor government moves to enhance profits of retirement village operators. 

Hollow claims of striking a balance between facilitating industry growth and innovation with retirement village resident consumer protections.

Victorian Retirement Villages Act Shocker for Residents

The new Victorian Retirement Villages Act 2024 is a shocker for residents. The newly appointed Minister for Consumer Affairs @NStaikos will cop the blame for all the bungling since 2017. @jbourmanmp @ademsomyurek @_davidlimbrick @georgievpurcell @rachelpaynemp @dettershankmp pic.twitter.com/1YtvPzi5Yr

— Les Scobie (@retvilldotnet) December 19, 2024

Crunch Numbers Before Entering Retirement Village

WAtoday in an article by Rachel Lane of Aged Care Gurus advises retirees to crunch numbers before entering retirement village.

"While it can be said that choice makes the transaction more complex, anytime you have choices there are factors to consider. If you are thinking about moving to a retirement village you should crunch the numbers, if the retirement village isn’t offering the payment method that suits you it doesn’t hurt to ask.

Having different payment options means the same unit can sell for a vastly different price depending which option you choose. It also means that if you can’t afford one price you may be able to afford another, bear in mind too that, unlike aged care, the money you pay to a retirement village isn’t guaranteed by the government.

Illawarra Retirement Trust has been providing payment alternatives since 1969. At their Harbourside village close to the beach in Kiama a one bedroom unit with “limited sea glimpses” sells for $257,000 as a donation, $534,000 as a bond, $380,000 with a 25 per cent exit fee or $461,000 with a 10 per cent exit fee. Or you can have a large three bedroom unit with sea views for $618,000 as a donation, $1,285,000 as a bond, $914,000 with a 25 per cent exit fee or $1,109,000 with a 10 per cent exit fee."

Read the full article here - Crunch the numbers before you commit to a retirement village

Crunch Numbers Before Entering Retirement Village

Please sign the petition for retirement village reforms.

Lendlease Leads With Retirement Village Innovation

Lendlease leads with Retirement Village innovation, the Weekly Source reports:-

"Following 12 months of testing, Lendlease has revealed its consumer choice of four retirement village contracts:

1. Traditional DMF – “Hold on to your cash now by deferring payment of fees until you leave the village”;


2. Prepaid Plan – “Enjoy the certainty of paying the management fee upfront when you enter the village. Retain capital gain”;


3. Refundable contribution – “Feel secure knowing your money is guaranteed and don’t pay a management fee – instead pay a higher contribution on entry that is refunded when you leave”; and


4. Pay As You Go – “Pay a monthly contribution rather than a lump sum management fee”.

The detail on each plan.

Traditional DMF

Average of 30-35% DMF on the resale price after seven years. 1-2% sales commission. $10-15,000 refurbishment fee with option to upgrade at between $50-70,000 to maximise resale price.

Prepaid plan

Pay an upfront fee of around 18% and receive 100% of the sale value when leaving the village (less reinstatement costs, selling costs etc). For example, a $500,000 DMF home will cost $590,000 upfront. After 10 years if it sells for $1 million the departing resident will receive the $1 million.

Roughly one in five customers have taken this option over the 12 month test.

Refundable contribution

Pay a higher ingoing contribution and Lendlease will provide a ‘money back guarantee’ on a set amount when you depart. An example is a $500,000 home may have a $650,000 guarantee when you leave, paid within 60 days. There are no selling fees at the end but you do pay an upfront establishment fee of 3% ($15,000 in this example).

In addition to certainty for the family on the cash settlement, there is the certainty of funding residential aged care.

Pay as you go

Developed for customers (and their families) who may not wish to sell the family home or are managing their investment income.

Still under the Retirement Villages Act, they will receive a lease (currently five years) and pay rent with no upfront payment and no departure fee or payment.

The rent will be above the local market, reflecting the community facilities enjoyed and management support. They will also pay the same ongoing fees as the rest of the village residents on top of their rental fees.

The ‘pay as you go’ alternative is currently only available for serviced apartments during the test phase but is intended to be rolled out to the wider village home market."

Read the full story here:- Lendlease to lead consumer RV innovation with DMF alternatives

Lendlease Leads With Retirement Village Innovation

Lendlease's New Retirement Village Contracts

The Sydney Morning Herald reports:- An article by Rachel Lane from Aged Care Gurus on Lendlease's New Retirement Village Contracts.

"These new payment alternatives are more like the options you get when buying a mobile phone or a luxury car. Lendlease said it came up with the options by researching the market, including consumers who rejected the current offering. The feedback suggested that for some people a capital gain was important, others wanted certainty they'd get back what they'd paid, and a third group desired the ability to pay month by month.

So what are the options?

Lendlease will still offer its current contract, whereby you pay an ingoing price and when you leave you receive the sale price, less a deferred management fee of up to 35 per cent of the sale price, and any reinstatement fees and selling costs.

The first alternative is a prepaid price whereby you pay the management fee upfront (about 18 per cent of the purchase price), you still pay reinstatement fees and selling costs at the end but you receive all of the capital gain (or loss).

The next option is a refundable contribution whereby the amount you pay is refunded in full within 60 days of leaving. With this option a non-refundable establishment fee of 3 per cent is charged upfront.

The final option is to pay as you go, whereby you pay a monthly charge and a security deposit equal to 24 months' “rent”. The security deposit is refunded to you within 60 days of leaving the village. There is an establishment fee equal to three months' rent. Currently this option is only available on serviced apartments.

How does it affect the price?         Read the full story here:- Doing the sums on Lendlease's new contracts"

Lendlease's New Retirement Village Contracts

Retirement Village Residents Not Valued

Retirement Village Residents Not Valued - In the 2018 Villages.com.au National Resident Survey of 19,500 retirement village residents only 37% recorded that they felt a valued customer.

"One of the most compelling statistics out of our Villages.com.au National Resident Survey 2018 was the statistic that just 37% of the 19,500 residents surveyed felt valued as a customer by their operator.

Customers who don’t feel valued certainly won’t be loyal customers.

Customers who don’t feel valued will happily discuss their grievances with regulators and the media.

Witness Aveo and the Four Corners/Fairfax coverage last year.

The resident associations sum up the problem as a ‘lack of communication and respect’.

It is now clear that the majority of complaints however are not acknowledged and not responded to. The longer a resident is in a village, the greater the opportunity to have a complaint and the greater the opportunity to not be listened to and not be respected." - Chris Baynes

Retirement Village Residents Not Valued

 

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Victorian Retirement Village Fire Safety Issue

Victorian Retirement Village Fire Safety Issue - Victorian Retirement Villages can suffer a heightened danger when it comes to an emergency. There is no law that mandates that a village operator must have an emergency evacuation plan or emergency assembly point.

Given the recent bush fire emergency in South West Victoria and a fire in the recreation centre at a Melbourne retirement village this seems a dangerous oversight by successive Victorian governments.

There is a retirement village in rural Victoria with over 150 units that when quizzed by the elderly residents about the matter advised them that in an emergency they were to ring family or friends for assistance.

Should a disaster occur who would be the most culpable, the operator or the government of the day.

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Retirement Village Operator Abolishes Hated Fee

Retirement Village Operator Abolishes Hated Fee

In a move that may have an impact on Australian retirement village operators NZ operator Metlifecare has abolished weekly fees on empty retirement-village units in their large national chain of retirement villages, leaving many elderly people and their estates potentially much wealthier.

NZ Herald reports - Metlifecare abolishes weekly fees on empty village places.

"Weekly fees have been abolished on empty retirement-village units in a big national chain, leaving many elderly people and their estates potentially much wealthier.

A lobby group representing inhabitants has welcomed the move, saying other villages should fall in line.

The 24-village Metlifecare wrote to residents last month saying fees would end once they left their places, whereas previously residents were liable for up to half a year's fees.

Asked why the company had changed its policy, Sowry told the Herald: "We have reviewed all aspects of our commercial offering and formed the view that this change was appropriate to ensure competitiveness and value to prospective residents. We have also implemented a new offer which is an industry first whereby on all new Occupation Right Agreement's entered into post February 26, residents or their families will be able to access $20,000 of their capital sum on vacation of their unit.

Colin Porter, a member of the executive of Retirement Villages Residents Association and chairman of the Auckland region, welcomed the change.

"Under the code, they can carry on for six months, then be reduced by 50 per cent. That's part of the code. We don't think it's fair. We applaud Metlifecare for the change its made," Porter said."

Retirement Village Operator Abolishes Hated Fee

Read the full story here :- Metlifecare abolishes weekly fees on empty places

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43% Of Retirement Village Residents No Happier

43% Of Retirement Village Residents No Happier.

The Weekly Source reports:-

In an industry survey of 19,477 residents across 529 villages residents who purchased within the last 5 years, the Weekly Source reported 57% of village residents reported their life satisfaction and happiness had improved as a result of their move. However this highlights that a whopping 43% have reported that their life satisfaction and happiness has not improved and 13% reported that it had in fact decreased.

There were no results announced for retirees who had been a village resident longer than 5 years.

Given the immediate and long term financial cost of retiree accommodation in a retirement village as apposed to residential accommodation within the general community, this 43% figure and the 13% figure would be expected to grow over time as residents begin to understand the true financial cost of retirement village living.

There are reports that the true cost of living in a retirement village as opposed to a residential tenancy agreement within the general community is almost double. See story here - Renting cheaper than a retirement village

This highlights the importance of Government reforms to ensure retirement village accommodation costs are clear and fully transparent and that the balance between investor returns and accommodation costs to retirees is fair and reasonable.



 



 

43% Of Retirement Village Residents No Happier.



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Kathryn Greiner Warns Retirement Village Operators

Kathryn Greiner Warns Retirement Village Operators.

The Weekly Source reports -

"Kathryn Greiner’s warning for village operators: transparency should be top priority.

Alison Cheung of Commercial Real Estate, part of Domain, reported Ms Greiner saying: “It’s about providing accommodation at a price that people can afford, whether it’s the high end, the middle or the low. Call it for what it is, deal with it transparently,” she said.

As we reported last Friday, Ms Greiner said: “You run a reputational risk because retirement living is seen as a property play dressed up as care. It’s a property play, nothing wrong with that. But don’t pretend it’s a care factor issue.”

Ms Greiner, who also chairs the NSW Ministerial Advisory Council on Ageing, also warned the current village model was ripe for disruption, labelling over-55’s housing “a really old concept”.

“You have to think about this to see how you adjust and modify your work practices and improve the brand so it is a true option in the community.”

Food for thought from the head of the NSW Government inquiry into the village sector. Her report was given to the Minister, Matt Kean, in December and we await his proposed actions."

Full story here - Kathryn Greiner’s warning for village operators

Kathryn Greiner Warns Retirement Village Operators.



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Retirement Housing Advice and Advocacy Program

Retirement Housing Advice and Advocacy Program.

The Senior Newspaper reports -

"HELP is at hand for Victorian seniors weighing up their living options with the launch of an advice service to guide people through the retirement housing maze.

The state’s first service dedicated to supporting people in retirement housing has been set up by not-for-profit community group Housing for the Aged Action Group (HAAG).

Co-manager Fiona York said the Retirement Housing Advice and Advocacy Program offers help to seniors living in caravan and residential villages, retirement villages and rental villages across Victoria.

Residents must be 55 and over with some form of financial disadvantage or receiving a Centrelink benefit.  The service can also provide advice on housing options, including things to look out for when considering entering a retirement village.

“HAAG has been assisting residents in retirement housing for a number of years but this is the first time a specific program has been provided by government in the retirement housing space,” Ms York said.

“HAAG’s knowledge and expertise gained over 15 years of working directly with residents have made it an ideal organisation to take on this role.”"

See full article here - HAAG Retirement Housing Program

Retirement Housing Advice and Advocacy Program.



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Transfer of Family Wealth to Large Multinationals

Concerns are being raised amongst retirement village representative bodies as to the excessive transfer of family wealth to large multinationals.

President of the NSW Retirement Villages Residents Association Tom Gait is quoted "Families need to be aware that what we are talking about here is the transfer of intergenerational wealth, not to families, but into the pockets of large multinationals. Shame about elderly people not having enough money for aged care,".

The table below gives an example where $1,030,045.30 is no longer destined for the family but is now in the hands of the retirement village operator, all this after just 7 years of retirement village occupancy.



https://youtu.be/4tF-_Mp1fF0

Transfer of Family Wealth to Large Multinationals.

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Retirement Village Residents To Speak Up

Retirement Village Residents To Speak Up -  Residents need to speak up in the lead up to three state elections in 2018.

2018 is likely to be a pivotal year in reforms for the retirement village industry. Despite numerous government inquiries going back decades there has been a constant stream of complaints about the industry. This golden opportunity will be taken by governments or again the legislators and regulators of the industry will fail all older Australians, again!

For past, current and potential retirement village residents:-

• If you have never visited you local member of parliament, do it now.


• If you have never written to your local member of parliament, do it now.


• If you have never emailed your local member of parliament, do it now.


• If you have never posted on Facebook about retirement villages, do it now.


• If you have never tweeted about retirement villages, do it now.


• If you haven’t joined your state retirement village residents representative organisation, do it now.

https://youtu.be/bbyKPUyJsR8

Retirement Village Residents To Speak Up.



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Renovation or Retirement Home

YourLifeChoices reports:-

Renovation or retirement home. The great ‘age in place’ conundrum.

Renovation or Retirement Home - "Property Council of Australia data says the average age people move out of their house and into a retirement village or nursing home is 75 years.

Yet, the vast majority of Australians aged in their 80s and 90s are staying put. The latest census reveals that 80 per cent of people between 85 and 89 years, and half of those aged 95 to 99 years, are still living in their own home.

Sources suggest that enquiries into retrofitting private homes to make them ‘age friendlier’ are soaring , as older people put off the inevitable need to be cared for in facilities other than their homes. Home Modifications Australia (MOD.A) Director Michael Bleasdale told YourLifeChoices that, all around the nation, there is a strong trend towards “ageing in place”.

While vulnerable Australians are forced to wait for the wheels of government to grind on, many may feel tempted to take a stepping stone to aged care life via buying into or leasing from a retirement village group.

However, consumer group CHOICE cautions against moving into a village unless you are fully aware of the huge costs involved from day one through to when you leave the complex.

The group warns: “The upshot is that it's very hard to know how bad the deal is until you decide to leave the village, whether because the operator exaggerated its charms or because you just need to move out.

“At that point you might find out the undisclosed and unexpected exit costs have made your village unit a very poor investment indeed. And to rub salt in the wound, the village operators often don't have to pay you back what's left of your loan until months after you've left, and sometimes even longer.”

Another important consideration is that, over time, the village apartment you buy may eventually need modifications. At that point, it is likely you will have to pay for them yourself.""

See the full story here - Full Retirement Story

Renovation or Retirement Home.



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Village Survey Reports Both Satisfaction And Anger

The Weekly source reports:-

National Village Survey reveals strong satisfaction but also ‘anger’.

"Emotions are high in villages across the country.

The split has been about 50/50 in praise of their village and ‘we are not happy with our village’.

This is our third National Survey (2011 and 2013) and the resident climate has changed significantly.

‘Respect’ is the most common word expressed, criticising the operators and management.

A full analysis of the big issues and actions that need to be taken will be presented at our LEADERS SUMMIT 2018 at the Hilton Sydney, Thursday 15 and Friday 16 March."

Full story here:- Village Survey Reports Both Satisfaction And Anger

Village Survey Reports Both Satisfaction And Anger



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Petition For Retirement Village Reforms

Petition For Retirement Village Reforms - Les Scobie an eleven year retirement village resident and advocate for retirement village reform has started an on-line petition to be presented to the Victorian State Government in the lead up to the Victorian state election later this year.

You can sign the petition here - https://www.communityrun.org/petitions/retirement-village-reforms

The petition asks for:-

Implementation of retirement village reforms inclusive of the following:-

• Create greater fairness in the financial outcomes for residents for what is primarily the provision of residential accommodation.


• Total revision of the Retirement Villages Act 1986.


• Easier access to the law for residents through the appointment of an industry Ombudsman.


• Simpler contracts.


• Greater clarity as to who is responsible for ongoing costs.


• Amendment to the legislated definition of a retirement village to enable occupancy by way of a Residential Tenancies Agreement.


• Outlaw the Deferred Management Fee model where the in-going fee does not reflect a relevant discount to the asking price of a commensurate property within the general community.

Les states in his petition,

"For decades legislators have attempted to define an appropriate balance between the cost retirees should pay for the provision of residential accommodation within a 'Retirement Village'. As the industry has moved away from the Not For Profit to the Private Enterprise sector the Deferred Management Fee model is now failing Victorian retirees. The transfer of capital wealth/value from retirees to operators in these later times is now grossly excessive and obscene when compared to the cost of residential accommodation within the general community. It is time for an end to this practice and we call on all Victorian Legislators to implement the changes as outlined above in the best interest of all current and future Victorian retirees."

The petition can be signed here - https://www.communityrun.org/petitions/retirement-village-reforms



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New SA Retirement Village Laws

COTA SA Welcomes “Fairer” Retirement Villages Act Reforms

New SA Retirement Village Laws - "The South Australian State Government's new Retirement Villages Act, which come into force tomorrow (January 1, 2018), represents a fairer deal for those living in retirement villages, achieving a higher level of transparency and protections, says COTA SA.

COTA SA Chief Executive Jane Mussared says there are some important and very welcome changes to the Act, which strike a much better balance between the commercial requirements of village operators and the rights of village residents.

"We welcome the statutory repayment provision that allows residents leaving a village to be paid out for their unit after 18 months, whether or not it has been relicensed," Ms Mussared said.

"This had been a major sticking point for some of the residents we have spoken to, with some waiting for years before having access to their investment. It just hasn't been good enough."

Ms Mussared says the Act will also enable residents to continue to occupy their unit while it is being relicensed.

"At the moment residents are required to move out even though the unit may be vacant.

"The new legislation and accompanying regulations provide a greater level of transparency in both contracting and day-to-day management."

Read full story here:- COTA SA Welcomes “Fairer” Retirement Villages Act Reforms

New SA Retirement Village Laws



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Let's Make Some Noise

Let's Make Some Noise - Retirement Village residents need to make some noise in the lead up to three state elections in 2018.

2018 is likely to be a pivotal year in reforms for the retirement village industry. Despite numerous government inquiries going back decades there has been a constant stream of complaints about the industry. This golden opportunity will be taken by governments or again the legislators and regulators of the industry will fail all older Australians, again!

It took the ABC 4 Corners program 'Bleed Them Dry Until They Die' and the Fairfax press to finally draw the attention of legislators and regulators and the Australian public as to deep seated issues within the industry.

Current village residents have a unique window of opportunity to 'make some noise' in those states where a state election is being held in 2018.

Future village residents also have a unique window of opportunity to 'make some noise' about proposed changes that may see them better protected against an industry so heavily criticised in 2017.

For past, current and potential retirement village residents:-

• If you have never visited you local member of parliament, do it now.


• If you have never written to your local member of parliament, do it now.


• If you have never emailed your local member of parliament, do it now.


• If you have never posted on Facebook about retirement villages, do it now.


• If you have never tweeted about retirement villages, do it now.


• If you haven't joined your state retirement village residents representative organisation, do it now.

Go ahead, make your day, make some noise.

We are Retirement Village residents and we vote!

Let's Make Some Noise.

 



 

Retirement Village Legislators and Regulators

Retirement Village Legislators and Regulators should have an strong understanding of the issue upon which they are about to make or amend laws. It is doubtful this is the case when it comes to retirement village laws given the grossly different financial outcomes for each party and the current high level of angst among residents, advocates and professional advisors at this time.

Few retirement village  legislators and regulators understand the chart below, they are unable to fully grasp the financial destiny of the two parties in a retirement village, the operator and the resident. This destiny for each party is determined by legislation and business models sanctioned and encouraged by successive federal and state governments. It is easy to lay blame at private enterprise but they can only operate within a commercial environment permitted by laws that are made by governments.

"Any Retirement Village Legislator or Regulator with an understanding of the financial outcomes and how they occur for both the Operator and the Resident could not earnestly write or support the meager changes to the laws proposed" RETVILLDOTNET

It needs to be noted here that in the general residential rental market the return to a landlord is generally in the order of a 5% rental return plus any capital gain. There can be limited security of tenure for the resident although laws in Victoria have just been changed to improve this situation. The house/unit/complex in which the rental accommodation is provided as in the case of  a retirement village may have recreational facilities, the resident may or may not use these recreational facilities.

For a retiree wishing to enter the general residential rental market the cost of the accommodation is known up front and the process and market dynamics are well understood by both the retiree and their professional advisors. The retiree in the residential rental market DOES NOT have to pay a substantial in-going amount equal or near the value of the property, pay monthly maintenance and administration fees, pay refurbishment and administration costs on leaving the property nor have inflation decimate the present day value of any capital base of the retiree on executing an occupancy agreement. Any capital base held by the retiree on entering this type of accommodation contract is retained by the retiree and can be invested for a financial return.

However for a retiree wishing to enter a retirement village the full cost of the accommodation is not always known up front and the process and market dynamics are not always well understood by the retiree or their professional advisors. The retiree wishing to obtain residential accommodation in a retirement village DOES have to pay a substantial in-going amount equal to or near to the value of the property, pay a non-refundable fee in the order of 35% of the in-going amount charged, loan to the operator the remaining 65% of the in-going amount at 0% interest  not to be repaid until the retiree leaves the village, pay monthly maintenance and administration fees, pay refurbishment and administration costs on leaving the property, suffer the impact of inflation over the duration of occupancy on the present day value of the 0% loan amount.

The table below show the financial destiny of the two parties in a retirement village occupancy agreement. With an in-going charge of $850,000.00 and given the general parameters as described above the financial destinies of the operator and the resident after 7 years is:-

• $1,990,697.00 for the operator (Deferred Management Fee 35% of entry price - 100% of the capital gain)


• $    242,773.00 for the resident (Deferred Management Fee 35% of entry price - 0% of the capital gain)

Any Retirement Village Legislator or Regulator with an understanding of the financial outcomes and how they occur for both the Operator and the Resident could not earnestly write or support the meager changes to the laws proposed.

Retirement Village Legislators and Regulators.



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Hearing Loss & Smoke Alarms

Hearing Loss & Smoke Alarms

Read the full story here:- https://elainesaunders.com.au/are-you-fire-ready/

"If you have a hearing impairment, there’s an essential question you need to ask yourself:

Can I hear the smoke alarm if I’m not wearing my hearing aids?

Thankfully, there are specialised smoke alarms available which can, in addition to their normal function, send a wireless signal to a bedside alert system designed to wake a hearing impaired sleeper via a bright flashing light and bed shaker. Unfortunately, these specially designed alarms can cost up to $500 each.

To offset the high cost of this specialised equipment for those who cannot hear a standard smoke alarm, most state governments have a subsidy scheme. Get in touch with your relevant society.

New South Wales – The Deaf Society of NSW
www.deafsocietynsw.org.au/smokealarms

Victoria – Vicdeaf
http://www.vicdeaf.com.au/content.asp?id=31&t=smoke-alarm-subsidy&cid=81

Queensland – Deaf Services Queensland
http://www.deafservicesqld.org.au/sass

South Australia – Guide Dogs SA.NT
https://www.guidedogs.org.au/smoke-alarm-scheme

Tasmania – Tasdeaf/Hearing Link
www.tasdeaf.org.au

Western Australia - Independent Living Centre for WA Inc
http://ilc.com.au/funding/disability-equipment-grants/

It is a legal responsibility of all owners and landlords to install working smoke alarms."

Full story here:- https://elainesaunders.com.au/are-you-fire-ready/

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