Retirement villages have become an increasingly popular choice for older Australians seeking a balance between independence and community living. As the sector grows, concerns have emerged about the practices and regulations governing these communities. While many residents enjoy a comfortable lifestyle, others face challenges that highlight gaps in transparency and fairness.
In recent years, calls for reform have grown louder, with new legislation on the horizon aimed at addressing these issues. But what does this mean for the future of retirement villages, and how will it affect those living in them?
Regulation in Retirement Communities
Retirement villages have long been a popular choice for older Victorians, offering a blend of independent living, shared amenities, and a sense of community. However, the sector has faced criticism for opaque fee structures, contract ambiguities, and questionable practices that exploit vulnerable residents.
Instances of price gouging amongst elders, particularly concerning service fees and exit payments, have led to widespread calls for better regulation. This became clearer after a report over ABC magazine show 7.30 identified such instances that didn’t catch politicians’ attention in Australia, and wasn’t even discussed at the Aged Care Royal Commission. For example, a village resident who has opted to sell their house and leave the community is charged up to 60 per cent of the house purchase price plus renovation fees. The renovations are also mandatory and charged to next of kin if the resident passed away on-site.
With the number of Australians aged over 65 steadily rising, ensuring fair treatment for residents in retirement homes is an ethical imperative and a practical necessity. By introducing a mandatory industry code of conduct, the government can provide a standardised set of rules that protect residents’ rights while promoting transparency and accountability.
Although the Property Council Australia’s Retirement Living Council did introduce a code of conduct in 2019 that formally went into effect on 1 January 2020, it’s a voluntary law with under half of the estimated 2,300 retirement villages in the country signing on. It gets worse – none of those signatories have since been sanctioned for any violations.
Understanding the Retirement Villages Amendment Bill
The Retirement Villages Amendment Bill tabled in the Victoria Parliament marks a pivotal step toward addressing these issues. Penned by State Consumer Affairs Minister and Dandenong MP Gabrielle Williams, it is designed to modernise the Retirement Villages Act 1986, based on a state Parliament inquiry eight years ago. An exposure draft was made in late 2022, and public consultations on the matter took place from April to May 2023.
Key Features of the Retirement Villages Amendment Bill
Mandatory Industry Code of Conduct
The Bill proposes a compulsory code of conduct, the Retirement Villages Code of Practice, that all operators of retirement villages must adhere to. This code will cover:
- Clear guidelines for setting and communicating fees that must be disclosed to prospective residents before they move in.
- Rules ensure fair treatment of residents during disputes or contract negotiations.
- Minimum service standards, including the maintenance of shared facilities and amenities.
The code of conduct will also be synchronised with relevant legislation such as the Residential Tenancies Act 1997, Aged Care Act 1997 (Cth), and the Guardianship and Administration Act 2019.
Transparency in Pricing
To tackle the problem of price gouging amongst elders, the Bill introduces measures for greater price transparency. Operators will be required to provide detailed breakdowns of all fees upfront, ensuring residents understand their financial commitments. One element introduced, for example, modifies the entry payment clauses in the Act’s Section 3 as – under Section 3A – payment made for the resident’s right to occupy the new premises but it does not apply to cover rent or maintenance charges, which will be codified under Sec 3C.
Exit fees, identified in the bill as deferred management fees, will have no caps but will be calculated by certain specific formulas that the government will also monitor for accuracy. If a resident has opted to leave, the village operator will be forced to pay them back the amount owed, within a year of their departure.
Stronger Resident Protections
The legislation will establish more robust mechanisms for resolving disputes between residents and operators. This is particularly written in three new Parts to be put in the Act, Parts 6D to 6F, which have a detailed process of notification, convening, and resolution of disputes, including alternative resolution support under the Department of Government Services. Some clauses even order village operators to outline the entire dispute resolution process on their official websites.
Residents will also undergo annual contract checks to help refresh them on their knowledge and understanding of their papers. The village operators will also be mandated to establish an emergency management plan and hold periodic drills to ensure residents’ safety during serious emergencies.
Improved Oversight and Penalties
The draft amendment deputises Consumer Affairs Victoria to oversee the industry more effectively. This includes the ability to impose penalties for breaches of the code of conduct, ensuring operators are held accountable for unethical practices. On the other side of the coin, it will also have breach reporting for errant residents and detail further grounds for termination of a residential contract. Such matters will be put forth before the Victorian Civil and Administrative Tribunal.
Financial Services Minister Stephen Jones said further discussions of the Bill will be tabled in a national meeting of consumer affairs ministers this month.
Benefits of a Mandatory Code of Conduct
The retirement village sector stands to gain significantly from a mandatory industry code of conduct.
Protecting Vulnerable Residents
Older Australians often face challenges in understanding complex contracts or dealing with exploitative practices. A code of conduct provides a clear framework to help residents understand their rights and access support when needed. Housing for the Aged Action Group executive officer Fiona York highlights that the code’s focus on clearly defined contracts can help residents who are overwhelmed by legal jargon.
Standardising Practices Across the Sector
Without regulation, practices in retirement villages can vary widely, leaving residents vulnerable to inconsistent treatment. A mandatory code ensures all operators meet the same ethical and operational standards, promoting fairness and consistency.
Promoting Trust and Confidence
For the industry to thrive, it must earn the trust of its residents and their families. By enforcing transparency and fairness, the code of conduct can help restore confidence in retirement communities.
Clarity in Contracts
A standardised approach to contracts will help residents better understand their financial obligations, reducing the risk of unexpected fees. Council on the Ageing Victoria and Seniors Rights Victoria support the Bill’s emphasis on standardising contracts and improving regulatory oversight, although implementation remains a work in progress.
Improved Living Standards
Stricter maintenance and service guidelines will enhance the quality of life for residents.
Easier Dispute Resolution
A streamlined process for addressing grievances will empower residents to raise concerns about unfair treatment.
Challenges of a Mandatory Code of Conduct
While the proposed changes are undoubtedly positive, implementing a mandatory industry code of conduct is not without challenges.
Resistance from Operators
Some retirement village operators may push back against the added compliance burden, arguing that it could increase operational costs. Ms York also expressed concern that the code of conduct might even empower retirement village operators to intimidate residents into leaving and pay exorbitant fees on the way out, especially if the resident feels the community is no longer conducive to their health.
Ensuring Compliance
Monitoring and enforcing adherence to the code will require significant resources, including skilled personnel and adequate funding for regulatory bodies.
Balancing Regulation with Flexibility
While the code aims to protect residents, it must also allow operators enough flexibility to manage their businesses effectively. Striking this balance is crucial to avoid stifling innovation or discouraging investment in the sector.
Ensuring the Bill’s Success
The Retirement Villages Amendment Bill is a promising start, but ensuring its success will require collaboration between the government, operators, and residents. Key steps moving forward include the following.
Engaging Stakeholders
The government must involve residents, industry experts, and advocacy groups in shaping the final code of conduct to ensure it addresses all concerns.
Educating Residents
Awareness campaigns can help residents understand their rights under the new framework, enabling them to make informed decisions.
Continuous Review
As the industry evolves, the code of conduct and associated legislation should be periodically reviewed to address emerging challenges and opportunities. The Bill also taps the Commissioner for Residential Tenancies as the state government’s advisor on retirement villages, and will also implement associated research and advocacy measures.
Conclusion
The proposed reforms to the retirement village sector represent a crucial step toward ensuring fairer and more transparent practices for residents. With the introduction of a mandatory code of conduct and stronger protections, there is hope that the industry will become more accountable, offering older Australians the security and peace of mind they deserve. However, the success of these changes will depend on effective implementation and ongoing oversight, as well as collaboration between government, operators, and residents. By addressing the challenges head-on, we can look towards a future where retirement communities truly prioritise the wellbeing and dignity of those who call them home.
The A.S.A.G. Reverse Mortgage
The A.S.A.G. Reverse Mortgage sees a mandatory code of conduct as beneficial for seniors moving into Aged Care facilities like retirement villages. This solution can help finance a home in the village. Consulting with a financial advisor and your retirement village can clarify the payment structure and, under the proposed Bill, may help avoid high exit and renovation fees.
Please call A.S.A.G. at 1300 002 724 or email to info@asagfirst.com.au.
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DISCLAIMER: This article is for informational purposes only and does not constitute official advice. A.S.A.G. is not affiliated with any mentioned brands or companies.