Victorian Retirement Village Residents Misled

How the statement by Consumer Affairs Victoria leads to Victorian retirement village residents being exposed to financial exploitation by paying a maintenance charge greater than they have a statutory obligation to pay.

The statement by Consumer Affairs Victoria is from page 13 of their booklet A Guide to Living in a Retirement Village. It is contended that the statement misleads the entire Victorian industry when it comes to the methodology used to calculate the $ value of the maintenance charge. Whilst the statement may have been purposely simplistic given the nature of the publication, it has been adopted and practised by village operators statewide as law.

The misleading statement -

“The retirement village can only increase your maintenance charge in line with the annual Consumer Price Index (CPI) adjustment.

A bigger increase is only allowed if it is approved by a resolution of the residents’ committee or a resolution of a majority of the residents.”

The statement guarantees the payment of a ‘maintenance charge’ at a $ value greater than village residents have an obligation to pay under the act. It deprives residents of the statutory protections afforded them under Sections 38.1, 38AA, 38.2, and 38.4 of the Retirement Villages Act.

The page 13 CAV statement incorrectly prescribes that the primary question to be asked in each and every year of village operation is – is the increase in the maintenance charge to be greater than a cpi increase. Residents are afforded protection under Section 38.2 which mandates the primary question each year is - is the $ value of the proposed maintenance charge to be greater than the Section 38AA cpi index % increased adjusted maintenance charge.

The ‘adjusted maintenance charge’ is not the previous maintenance charge adjusted for cpi. The confusingly named adjusted maintenance charge is a Section 38AA cpi calculated, standalone, $ value. A value to which the proposed maintenance charge is compared (benchmarked) for the purposes of affording residents protection under Section 38.2 each year.

The page 13 statement incorrectly prescribes that a Section 38.4 vote of residents is only required in those village years where the increase in the maintenance charge is greater than a cpi increase. Section 38.4 mandates a vote of residents in each and every village year where the $ value of the maintenance charge is to be greater than the Section 38AA cpi calculated adjusted maintenance charge.

Table A and then Table B below establish that for a village of 90 units, with a maintenance charge in the first full year of $624.00 per month, residents are misled into paying $357,062.62 more in their maintenance charge than obligated to pay under the RV Act. Using the Consumer Affairs methodology in Table A - 

1. The operator sought and was granted authority by unsuspecting residents in years 2 and 6 under the invalid CAV methodology of - the increase in the maintenance charge was greater than a cpi increase.

2.The operator contended that resident authority was not required in years 3,4,5, 7 & 8 under the invalid CAV methodology of – the increase in the maintenance charge was not greater than a cpi increase.

                                                                              Table A

Under the methodology espoused by Consumer Affairs Victoria, the operator failed to calculate a $ value for the statutory ‘adjusted maintenance charge’ despite having an annual obligation to do so under Section 38AA of the RV Act.

Table B below uses the provisions of Section 38.1, Section 38AA, Section 38.2 and Section 38.4 of the Victorian Retirement Villages Act to calculate the maintenance charge. The outcome over years 3.4.5.7.& 8 of village operation is a payment by residents of $357,062.62 in their maintenance charge above their statutory obligation to pay.

                                                                             Table B

Table B above calculates the $ value of the maintenance charge using the statutory provisions of Section 38.1, Section 38AA, Section 38.2 and Section 38.4 of the Victorian Retirement Villages Act.

The fee overpayment stems from -

1. The village operator in calculating the maintenance charge used the invalid methodology espoused by CAV in Page 13 of their booklet A Guide to Living in a Retirement Village. The actions of the village operator breached the provisions of Section 38.1, Section 38AA, Section 38.2 and Section 38.4 of the RV Act.

2. The operator failed to calculate in each and every village year (excl 1st) a $ value for the poorly named, stand alone, Section 38AA cpi calculated adjusted maintenance charge. (One is shown in Table B to illustrate the magnitude of the financial exploitation problem)

38.1 - "adjusted maintenance charge" means the adjusted maintenance charge determined and indexed in accordance with section 38AA;

38AA(2) - For the purposes of subsection (1), the adjusted maintenance charge must be determined for each relevant financial year for the retirement village in accordance with the formula—

3. The operator failed to compare (benchmark) the value of the proposed maintenance charge to a $ value for the Section 38AA cpi calculated adjusted maintenance charge. This action denied residents the protection afforded them each year under Section 38.2 of the RV Act.

38(2) Despite anything to the contrary in a residence contract, a management contract or the bylaws a resident is not required to pay a maintenance charge to the extent to which it is greater than the adjusted maintenance charge.

4. The failure of the operator to compare (benchmark) the value of the proposed maintenance charge to a $ value for the Section 38AA cpi calculated adjusted maintenance charge also denied residents the protection afforded them under Section 38.4 of the RV Act. That in each and every year where the operator proposes a maintenance charge at a $ value greater than the Section 38AA cpi calculated adjusted maintenance charge, village residents are granted the statutory right to choose which of the two values they will pay.

38(4) Subsection (2) does not apply if the payment of a maintenance charge that is greater than the adjusted maintenance charge has been approved by resolution of a majority of the residents at a meeting of tthe residents or is approved by resolution of the residents committee.

Table B establishes that residents were misled into paying some $357,000 more in their maintenance charge than they were obligated to pay under the provisions of Section 38.1, 38AA, 38.2 and 38.4 of the Victorian Retirement Villages Act.

This example is for an industry average size village of 90 units and paying an industry average size $624 per month toward village operating costs. There are some 450 villages in Victoria, housing some 36,000 Victorian retirees, operating under the provisions of the Retirement Villages Act. A frightening $160 million dollars in unauthorised charges over the period.

What is wrong with Victorian Retirement Villages

The critical importance of retirement village resident submissions to Victorian state government inquiries is that they are actually living the experience not simply 'working in the field'. They know what is wrong because they have experienced it, suffered from it.

Victorian retirement village residents find that there is almost zero protection when something goes wrong, or the system to obtain that protection is so cumbersome, so demanding on them, that surrender is ultimately the chosen option. And village operators know that and use it to their own financial advantage.

All this from a Victorian Labor government that fails to enforce the law as it is currently written, let alone to improve it to protect the very people it was originally written to protect.

"The law was clearly on the side of the village residents. It was a lack of access to affordable, quick, decisive enforcement of the law that failed them most". - Retvilldotnet

Retirement villages, the process of for-profit operators seeking financial reward from this commercial activity under the guise of the provision of benevolent housing for older Victorians. Sadly and particularly in Victoria the commercial risks to operators are dampened by statute whilst at the same time the commercial rewards are enhanced by statute. 

For Victorian retirees who make that fateful decision to enter a retirement village it is the complete opposite. The payment of the capital value of the village unit, not for ownership simply occupancy. The payment of all the costs of property ownership with none of the rewards.

"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 corporations. Shame about the elderly not having enough money for aged care."

So what is wrong with Victorian Retirement villages, the answer is -

1. Bureaucrats who don't really know or fully understand the product they are producing legislation for.
2. Legislators who don't really know or fully understand the product they are enacting legislation for.
3. State Governments who are far too easily seduced by slick marketing from the industry.
4. A failure of all of the three parties above to listen to the one group of people who really do know and fully understand the product, the village residents and their families. 

Village residents understand because they suffer financially from the legislative inequities produced by Bureaucrats, Legislators, State Governments.

Retirement Villages Look Before You Leap

When it comes to Victorian retirement villages the old adage of Look Before You Leap has never been more true. 

The new Jacinta Allan, Nick Staikos, Consumer Affairs Victoria operator centric 2025 version of the retirement villages act makes it even more imperative.

Research, research, research, the best outcome may be not to leap at all.

 

Vic Government Fails Retirement Village Residents

Vic @jacintaallanmp government refuses to repeal/amend Section 38.5 in the new proposed RV act, this despite being aware of the problem. Another 'free kick' to retirement village operators. THE FOX IS IN THE HENHOUSE. @WendyLovellmp @georgievpurcell @JaclynSymes @HAAGHomeAtLast pic.twitter.com/OSs6RZauGf

— Les Scobie (@retvilldotnet) December 15, 2024

Andrews Government Inaction on Retirement Village Reforms

Andrews Government Inaction on Retirement Village Reforms - The Victorian Daniel Andrews government is dragging the chain with retirement village reforms.

Despite a 2016 inquiry htp://www.retvill.net/vic-government, recommendations in early 2017 then a government response to the recommendations, no major action has been taken to reform retirement villages in Victoria.

The inquiry, recommendations and response have been described as - left disappointed, no commitment, lost opportunity, evidence ignored, concerns dismissed, a damp squib, fillip to developers, brush-off to residents.

"Residents and their families will ultimately pay the price for the Victorian Government’s inaction on retirement housing reform''

Comments attributable to:

Gerard Brody, CEO Consumer Action Law Centre

• If you’re an older Victorian and want to resolve a problem with your retirement living, it should be cheap, quick and accessible. The evidence has shown that we need an ombudsman scheme for this sector.


• Recent piecemeal inquiries by the Victorian Government into the sector have failed to reduce the complexity of contracts or improve outcomes for residents. We had hoped for a strong response from the Government today that showed it cared for residents and their families. Unfortunately, we were left disappointed.

Lawrie Robertson, Vice-President Residents of Retirement Village Victoria

• There is no commitment in the Victorian Government’s response to improving the rights and protections for residents.


• Our members had hoped for quick implementation of a simple, free, binding dispute resolution service and they have been left bitterly disappointed.

Ronda Held, CEO COTA Victoria

• This is a lost opportunity for leadership in responding to the concerns of thousands of older Victorians and their families.


• The Victorian Government had overwhelming evidence of the problems in this sector, and that evidence has been ignored.

Fiona York, Co-Manager, Housing for the Aged Action Group

• None of the main concerns of residents have been adequately dealt with.


• Residents’ concerns about unfair and confusing fees, management practices and dispute resolution have been either dismissed or deferred.

Levitt Robinson solicitors

• The report of the Victorian Enquiry into the Retirement Housing Sector has proven to be a damp squib and disappointed many genuinely aggrieved Victorian residents of retirement villages.


• The enthusiasm with which it was greeted by the Property Council of Australia’s Victorian Division, when it was released on 7 March 2017, is a strong indication that it was a fillip to developers and brush-off to resident retirees.

Andrews Government Inaction on Retirement Village Reforms



 

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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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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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.

 



 

Continued Push for RV Legislation Change

Continued Push for RV Legislation Change -   Long time advocate for reforms to Retirement Villages Charles Adams continues his push for amendments to the Victorian Retirement Villages Act 1986.

In a continued push for retirement village legislation reform Charles forwarded to the relevant minister Marlene Kairouz and selected Victorian politicians the following submission,

"The  service/ maintenance fee went up 50%, a month after the writer and disabled wife moved into a unit in a retirement village. This is his suggestion to make the Victorian Retirement Village Act fit for its stated purpose of protecting retirees who consider choosing to downsize by leasing a unit in a loan-lease retirement village.

Nothing much will change for the hundreds of dissatisfied lessees who submitted to the LSIC inquiry, those who presented to the hearings, or for all future lessees.

1. Revise the Retirement Village Act to mandate all future prospective lessees are offered a secure tenure residential tenancy contract**. This is the only known cost transparent lease, and therefore the only model compatible with a free market.This is not to preclude the offer of optional ”interest free capital loan leases”, (theinterest free loan is euphemistically called and ingoing contribution) as it may be more attractive to younger retirees who enter a village unit early and could have a long life expectancy, and a longer duration tenure . It is impractical to compare “Loan Lease” contracts as they obscure the declining cost rate so a free-market cannot exist. For some it offers taxation and or pension advantages.
   


2. Appoint a retiree-housing ombudsman to provide affordable enforceable dispute resolution.
   


3. Require all retirement village managers qualify, within 6 months of appointment, to an independent institution course, covering the RV Act, regulations, ethics, contracts and meeting maintenance needs.

** The village developer/operators will declare this unacceptable, saying they don’t have the capital to build villages without the availability of the zero cost capital, (provided by the “in-going contribution”) even tho they only have 5.7% of the over 65 years demographic. Secure tenure residential tenancy contracts are the norm, in the USA, where over 15% of the over 65s lease in retirement villages.

The zero cost capital is a subterfuge to disadvantage lessees for the benefit of the developer/operators management bonuses and shareholders.

While this is for the Victorian RV Act, the contract model that it generates is so lucrative that it is now the de facto Australasian standard."

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Retirement Housing Matters

Retirement Housing Matters - Advocacy groups Council On The Ageing, Consumer Action Law Centre, Housing for the Aged Action Group and Residents of Retirement Villages Victoria  are building on their demand for Retirement Village reforms in 2018 an election year in Victoria.

"Key points in the retirement housing matters campaign are:-

1. Establish a Retirement Housing Ombudsman - Retirement housing residents need access to an industry- funded ombudsman service, to provide free, fair and binding determination of retirement housing disputes, across the full spectrum of retirement housing types. Currently, residents must go to the Victorian Civil and Administrative Tribunal (VCAT) to resolve their disputes with operators, which is an expensive, lengthy and intimidating process. Running a substantial matter through VCAT is simply beyond the financial capacity of most retirees, and the process itself can be overwhelming. A case run by Consumer Action was independently assessed as costing over $250,000. As a result, many choose not to pursue legitimate grievances through VCAT, leaving those grievances unchallenged and largely unreported.


2. Put a Stop to Excessive Fees - Retirement housing exit fees are currently unregulated and open to exploitation by operators. These fees appear to have no relationship to the value of the services provided. Exit fees must be reformed and regulated to prevent excessive price gouging, to provide greater clarity around pricing, and to ensure that residents can compare options. There are different types of exit fees, including, deferred management fees (DMFs), refurbishment and reinstatement fees, legal costs, share of capital gain and long-term maintenance fees. One of the most problematic exit fees is the DMF. These exit fees are generally 20 to 40% of the sale price of a unit. DMFs are applied in both residential park and retirement village contracts. These fees may not be clear to residents when they move in, making informed choice and comparison
   difficult, if not impossible.


3. Introduce Mandatory Minimum Training and Accreditation Standards - Shockingly, there are no minimum training or accreditation requirements for retirement housing operators. Residential parks are not even registered with Consumer Affairs Victoria (CAV). The lack of minimum standards in retirement housing has a significant impact on the day-to-day lives of residents and their families, and it is simply unacceptable. Meanwhile, training and accreditation programs developed by industry have failed to meet appropriate standards, and lack credibility. Retirement housing employees should be required to meet minimum training and ongoing professional development standards. This training should be a minimum Certificate IV qualification under the Australian Qualifications Framework. This would not only improve the reputation and professionalism of the industry, but would recognise the unique skills and responsibilities required of managers. We also recommend ongoing professional development and banning managers who have significantly
   breached their duties. Police checks should also be mandatory for all staff.


4. Reduce the Complexity of Contracts - It is not uncommon for retirement housing contracts to exceed 100 pages in length. Lawyers at the Consumer Action Law Centre recently described these contracts as ‘some of the worst [they had] ever seen’. Older Victorians are often going through a traumatic and upsetting time of their lives as they
   leave their family home to enter a village or other retirement living community. They should not be expected to navigate complex and lengthy legal documents to make significant life decisions.
   Basic guidelines should be developed to ensure that contracts are expressed in plain English and meet a certain standard of readability. While the Retirement Villages (Contractual Arrangements) Regulations 2017 (VicIC) establish prescribed terms and layouts for management and residence contracts, they have failed to address the length and complexity of contracts. Consumer testing of any standard layouts or terms is essential."

The Retirement Housing Matters campaign was first launched on Thursday November 30 - We’ve had the inquiry, now we need retirement housing reform!


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Amend Retirement Village Legislation

Amend Retirement Village Legislation, long time advocate for reforms to the Victorian Retirement Village Act 1986 Charles Adams has penned a letter to Dr. Maree Petersen, a senior lecturer in Social Work at the University of Queensland.

Dr. Petersen led a University of Queensland School of Nursing, Midwifery and Social Work study into retirement villages  https://www.uq.edu.au/news/article/2017/12/you-can-check-out-any-time-you-you-can-never-leave .

Mr. Adams in his letter asks Dr. Petersen to give greater weight to a Victorian legislation problem which has permeated the industry.

"By far the most important deficiency of retirement villages in Australasia is the definition of a village legislated in Victoria in their RV Act 1986. That mandates entry requires the prepayment of an ingoing contribution also called a donation.

The resulting contracts are so skewed in the developer/operators favour that that model has been adopted Australia wide regardless of all other states and territories legislation.

That contract model does three things

1. Generates very complex contracts that are incomprehensible to, in my estimate, over 90% of all lessees, also called residents. Those contracts are a very serious impediment to many people considering villages and results in a very low uptake of 5.7% of the over 65 demographic, across Australia. This figure is quoted by the Property Council of Australia at a meeting I attended earlier this year. That compares with 15% in the US where conventional residential tenancy contracts apply, and are well understood


2. Frontloads the monthly equivalent rental rate into the first few years of contracts, which makes it effectively a ransom that prevents some dissatisfied lessees ability to leave. They can no longer afford to go into other comparable downsized housing.


3. This contract model hides the very high effective rental rate. It hides it by making it impractical to calculate because of all the variables and time spread across the duration of contracts."

Mr. Adams proposes a change to the legislative definition of a retirement village as below,

Proposed definition for a Victorian Retirement Village.

1. Retirement village means a group of leased, with secure tenure residential tenancy dwellings, forming a community, the majority of which is retired persons, with all services for the common property included in the rental price.


2. Residential tenancy contracts, with monthly rentals are mandatory. Other contract models may be offered optionally.

This would make it compulsory for retirement village operators to offer a residential tenancy contract being the most transparent as to pricing and the most easily understood by retirees, families and professional advisors.

Amend Retirement Village Legislation



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Victorian Retirement Village Legislation Flawed

Victorian Retirement Village Act Proposed Cost Transparent Definition.

Victorian Retirement Village Legislation Flawed - Long time advocate for reforms to the Victorian Retirement Village Act 1986 Charles Adams says the Victorian Retirement Village Legislation is fundamentally flawed. Flawed by not allowing residential tenancy contracts with monthly rentals as the mandatory standard legislated definition of a retirement village, with other contract models only available as options.



He believes it should be mandatory for retirement village operators to offer all prospective residents’ residential tenancy contracts alongside the more traditional loan/lease, deferred management fee' style contract. Loan/Lease hides contract costs until months after the contract is terminated, making that model opaque.

See also:- http://www.retvill.net/retirement-village-legislative-reforms/

In a submission to the Minister for Consumer Affairs, The Shadow Minister and the spokesperson for the Greens Party,  Charles states:-

"The No.1 Victorian legislative reform required is a change to the current requirement that to enter a retirement village you must pay an in-going contribution and that contribution cannot be classified as rent.

The requirement for an inclusive rental price (residential tenancy) is the only known contract that provides the transparent cost rate at entry, necessary for cost comparison, and free market competition."

The fairer definition proposed for a Retirement Village.

1. Retirement village means a group of leased, with secure tenure, dwellings, forming a community, the majority of which is retired persons, with all services for the common property included in the rental price.


2. Residential tenancy contracts, with monthly rentals are mandatory. Other contract models may only be offered as an option.

Given the revelations that surrounded retirement villages during 2016 and 2017, Charles believes now is the time to act on the legislated definition of a retirement village.  "This proposed change has the capacity to provide transparency to retirees as to the actual cost of residential accommodation within a retirement village unlike the current deferred management fee model."

"So long as the present biased definition continues, people will continue to be hampered by the lack of free market competition in the retiree downsizing market, and some trapped by extraordinarily high exit costs."

 


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Retirement Housing Reforms Demanded

Retirement Housing Reforms Demanded

We’ve had the inquiry, now we need retirement housing reform!

Thursday, 30 November 9.30 am-11.30 am parliament house Spring st Victoria.

Retirees gathered for morning tea at the Victorian Parliament House to hear from their MP and plans for retirement housing reforms.

Consumer Action Law Centre, COTA Victoria , RRVV Victoria and Housing f o r the Ag e d Action Group also launched their joint Retirement Housing Election Platform looking toward the 2018 Victorian election.

Some key points from the meeting:-

• “Dispute resolution a significant concern” acknowledges the Minister for Consumer Affairs Marlene Kairouz, commits to reform the sector working with residents.


• Shadow Minister for Consumer Affairs Heidi Victoria MP pledges to reduce bureaucracy, look at options for dispute resolution inc. Ombudsman


• Ellen Sandell, Greens spokesperson for Consumer Affairs announces support for RVA review & retirement Ombudsman within 12 months

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Renting cheaper than Retirement Village

Calculations show that Australian retirees could be hundreds of thousand of dollars better off if they were to simply rent a property of choice rather than enter a Retirement Village.

New Long Term Leasing Laws in Victoria will enable retirees to gain security of tenure not available before now. Retirement Villages have been able to offer a security of tenure for retirees not generally available within the general housing market. For this Retirement Villages charge handsomely and whilst providing a few treats such as a communal hall, pool, bowling green etc. village residents pay for these facilities in what can be a complex payment structure whether they use them or not.

These long-term leases will give retirees an opportunity to retain their capital wealth making it easier to enter an Aged Care facility of 1st choice when that time comes or leave a nest egg for family members.

The retiree can face a major social and financial decision both for themselves and their families:-

1. Enter a Retirement Village with an in-going payment of $850,000.00 for just a conditional lease, not ownership.  The operator charges monthly maintenance fees on a unit the retiree does not own, a refurbishment cost at departure on a unit the retiree does not own, a deferred management fee charge of 35% of the in-going payment. On departure the difference ($552,500.00) between the in-going payment of $850,000.00 and the deferred management fee of $297,500.00 is refund to the retiree by the operator. All this whilst the retiree suffers a loss of earnings on their original $850,000.00 for the duration of their village occupancy.


2. Enter a  long-term tenancy arrangement for any commensurate unit within the general community. There will be a market rental cost to be paid to the landlord but none of the other costs generally associated with retirement villages. The retiree retains their original capital amount of $850,000.00 and can earn investment income to offset the rental costs.

As in any major financial decision professional advice should be sought including taxation and pension implications.

The table below examines the differing impacts of a retirement village versus rental on the capital wealth of a retiree over just 7 years of occupancy.

• Retirement Village - A capital value reduction of -$621,912.44


• Rental - A capital value reduction of -$ 77,494.00

The chart below indicates the cost of living in a retirement village is the order of double the cost of simply renting a commensurate property within the general community.  On a property to the value of $850,000.00 a likely rental cost would be $950.00 per week over 7 years wheres a retirement village cost is in the order of $1,805.00 per week.  The serious question for retirees is are any intangible benefits of a retirement village such as communal facilities, communal activities worth the cost of $855.00 per week. Security of tenure is a feature offered by retirement villages that cannot be matched in the general rental market at the moment, the Victorian government is enacting long term leasing laws.

Statutory Duty of Candour

"The Victorian Minister for Health has committed to consult on the introduction of the statutory duty of candour and has asked that this consultation be led by an Expert Working Group appointed to provide advice on legislative reforms arising from Targeting Zero.

• A consultation paper has been released seeking the stakeholder views on aspects of a statutory duty of candour to be introduced in Victoria.


• A statutory duty of candour is a recommendation of a review led by Dr Stephen Duckett into quality and safety across the Victorian health system.


• A statutory duty of candour is a legal obligation to ensure that consumers of healthcare and their families are apologised to, and communicated with, openly and honestly when things have gone wrong in their care.

A statutory duty of candour is a legal obligation to ensure that consumers of healthcare and their families are apologised to, and communicated with, openly and honestly when things have gone wrong in their care."

Full story here :- https://www2.health.vic.gov.au/hospitals-and-health-services/quality-safety-service/better-safer-care/statutory-duty-of-candour




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Legislate or Educate

Legislate or Educate - Will Retirement Village legislators stop the industry problems with tighter legislative controls and greater consumer protections or will they simply continue on the current path of so called educate retirees in the hope retirees can identify the problem for themselves.

This policy given the current public outcry seems to have failed many Australian retirees.

In the past the retirement industry has managed to persuade governments that greater consumer protections would come at the cost of industry growth and innovation. Governments have held the view that it was better to educate than to legislate.

Report after report identified the issues, the issues in 2007 were the very same issues today. Some argue that it is the very basis of retirement villages, the Deferred Management Fee model which has sent the industry on this path, a system designed for charity organisation decades ago, and that to just buy or rent is the best simplest reform to make.

The property purchase market and the property rental market are mature markets, well legislated, and very well understood by retirees. It is now 2017, let us hope we will not be back here in 2027 discussing these same issues.



 




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ACQA Reports St. John's Aged Care Failures

ACQA Reports St. John's Aged Care Failures - Melbourne Age in an article by Michael Bachelard and Ebony Bowden reports -

Ten flu deaths at nursing home amid serious management failure

"A fatal flu outbreak at a Wangaratta nursing home, where 10 residents died of influenza and two others from respiratory illness, was worsened by serious management failures, a scathing government audit has found.

In response, the St John's Village nursing home accepted the resignation of its own former acting care services manager and referred him to his professional body for potential sanction.

A federal government audit of the St John's Village home, which was ordered after the catastrophic outbreak, has found it took days after infections began in August for management to report the outbreak."

Read the detailed article here:- http://www.theage.com.au/victoria/ten-flu-deaths-at-nursing-home-amid-serious-management-failure-20171113-gzk29h.html

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Morning Tea with Vic Pollies

Morning Tea with Vic Pollies

"WE'VE HAD THE INQUIRY, NOW WE NEED RETIREMENT HOUSING REFORM!

JOIN US FOR MORNING TEA AT PARLIAMENT HOUSE ON 30 NOVEMBER TO HEAR FROM YOUR MP AND THEIR PLANS FOR RETIREMENT HOUSING.

MAKE SURE YOU CALL YOUR MP AND INSIST THEY ATTEND THIS EVENT!"

CALL HAAG 03 9654 7389 FOR YOUR MP'S CONTACT DETAILS

Housing for the Aged Action Group, Consumer Action Law Centre, Residents
of Retirement Villages Victoria and Council on the Ageing are calling on all Victorian legislators to join them for morning tea outside the Victorian Parliament House on November 30 to discuss reform issues, or lack thereof, around retirement housing.

Consumer Action, COTA Victoria, RRVV and Housing for the Aged Action Group will also launch their joint Retirement Housing Election Platform as all Victorians, particularly retirees, look toward the 2018 Victorian election.



Morning Tea with Vic Pollies

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Abandoned residents spark village warning

Brisbane Times in an artcle by Adele Ferguson reports -

'Steer clear' - abandoned residents spark village warning

" "Stay well clear of retirement villages," say the families of residents and former residents at Berkeley Living, a retirement village that saw state authorities forced to intervene on Friday evening after unpaid staff walked out.

What is equally shocking is that the retirement village has been dogged with issues for years, yet the regulators have been missing in action.

Earlier this month Fairfax Media revealed that Berkeley, run by convicted criminal Stephen Snowden, stands accused of not paying more than 30 families when the units sold. In some cases they were on-sold to new residents, who didn't get paid when the units were re-sold. Snowden denies the allegations and has called the families "scumbags". He denies not paying staff.

A recent media investigation into one of the biggest operators Aveo laid bare concerning business practices including punitive fees, churning of residents, complex contracts, misleading marketing promises and questionable safety and emergency services. In the case of its Aveo Way contract, the exit fees are 35 per cent after three years, and its Freedom Aged Care contracts exit fees are 40 per cent after two years. This means if a resident pays $600,000 for a Freedom unit, then leaves or dies after two years the exit fees are $240,000.

It is why the federal government needs to stop procrastinating and launch an inquiry into the sector or adopt recommendations made back in a 2007 parliamentary inquiry and regulate the sector federally.

If there was any doubt, it should take a look at the Victorian government, which recently held a parliamentary inquiry then outlined a set of industry reforms that are a damp squib.

The Andrews government's idea of what reform looks like prompted various housing residents and advocates to issue the following scathing statement: "The pleas of residents have fallen on deaf ears, with many of the proposed reforms pushed off into the long grass of more reviews."

What was particularly flabbergasting was the decision not to create an ombudsman to help residents resolve disputes, despite the overwhelming evidence. The report said "significant further analysis and evidence are required before a position on this recommendation can be determined". "

Full story available here:-  'Steer clear' - residents spark village warning

Real Retirement Village Reform

Real Retirement Village reform outlined by Paul Latimer - Swinburne University of Technology - Swinburne Law School

It's Time for Federal Regulation of Retirement Villages

"As Australia’s population ages, increasing numbers of seniors move to a growing number of retirement villages. Unlike time shares, which are ‘managed investment schemes’ and therefore regulated as ‘financial products’ under corporate law administered nationally by the Australian Securities and Investments Commission (ASIC), the Commonwealth withdrew from the regulation of retirement villages in the 1980s on the basis that at that time they were local, usually run by religious bodies and charities and were not of national concern. The regulation of retirement villages was taken over by the States and Territories under their non-uniform Retirement Villages Acts and the common law. Until then retirement villages, often indistinguishable from Commonwealth regulated timeshares, were regulated in the original State and Territory Uniform Companies Acts in 1961 as ‘interests’, and then in later Commonwealth legislation as ‘prescribed interests’ by the forebear of ASIC, the then National Companies and Securities Commission (NCSC) with the State and Territory Corporate Affairs Commissions as its ‘delegates’.

Today retirement villages, which are largely owned and managed by the corporate sector, raise many issues of national concern such as accountability, fees and the rights of residents. Some aspects of retirement villages such as directors’ duties, fundraising, prospectuses and unregistered schemes are regulated as corporations by ASIC under the Corporations Act 2001 (Cth), but retirement villages are not regulated as ‘financial products’ under corporate law.

This article challenges the effectiveness of State and Territory regulation of retirement villages and calls for federal regulation of retirement villages by bringing retirement villages into the definition of ‘financial product’ in the Corporations Act 2001 (Cth) and in the Australian Securities and Investments Commission Act 2001 (Cth). As financial products, retirement villages would then be regulated by Commonwealth legislation which deals with financial services and financial markets, as regulated by ASIC. These laws include consumer protection provisions such as the prohibition of misleading or deceptive conduct, unfair contract terms, unconscionable conduct, licensing and high standards for those in the retirement village industry. This would result in a return to Commonwealth leadership of the regulation of retirement villages to harmonise and to consolidate the current mix of State and Territory regulation with federal legislation including an enforceable Retirement Villages Code of Conduct."

Full paper here:   It's Time for Federal Regulation of Retirement Villages