Victorian Retirement Villages Reforms

Financial

• The cooling-off period has been extended from 3 business days to 7 business days regardless of tenure.
• A deferred fee may only be charged on the ingoing contribution paid by the resident regardless of tenure.
• If the capital gain and the capital loss are shared between the operator and the resident, they must be shared in the same proportion.
• A deferred fee cannot be charged if the resident leaves the village within a settling in period (if there is one).
• Only one deferred fee can be charged where a resident transfers from one unit to another in the same village.
• A resident’s exit entitlement must be paid to the resident within 12 months of vacant possession for non-owner residents and freehold buybacks.
• Recurrent maintenance charges (excluding owners corporation fees), optional services charges, and the accrual of the deferred fee, must cease upon the resident providing vacant possession. However, if a resident dies before providing vacant possession, maintenance charges and any optional services charges cease upon death.
• If there is an operating deficit in the village operating fund in any year, that deficit is to be borne by the operator. However, if there is a surplus, it is to be carried forward to the following year accounts.
• The concept of delivering up “vacant possession” or “permanently vacating” will mean when: the resident ceases occupation of the premises, removes all their personal items, returns any keys and any notice period for giving a notice to vacate has passed.

Disclosure and Transparency

• An information statement (in a form approved by Consumer Affairs Victoria, which is not yet available) will be required to be prepared by an operator and will need to be published on the village website.This will replace the current fact sheet and disclosure statement.
• Residence contracts and management contracts for new residents must be in a new standard form (to be prescribed in new Regulations), which is still be determined.
• Operators will be required to provide non-owner residents a premises condition report prior to entry (in the prescribed form, which is still to be determined).
• Operators will be required to provide an annual contract check (in a form approved by Consumer Affairs Victoria, which is not yet available) to each resident in the village free of charge. The check must summarise, among other things, the resident’s obligations upon vacating the unit, payments due from the resident, a reasonable estimated sale price for the premises and their exit entitlement.
• Operators will be required to provide insurance information to prospective residents (via information statement) and existing residents (via contract check).

Village Operations

• Increases to maintenance charges by more than CPI will require a special resolution (the same exceptions for increases in rates, salaries and wages apply).
• A variation of a service or facility (including the provision of a new service or facility) will require a special resolution.
• A new quorum requirement for resident meetings depending on the number of residents in the village: 40 plus residents – 25%; 20 to 39 residents – 10 residents; or less than 20 residents – 50%.
• Financial statements must be reviewed by a qualified accountant (no longer have to be audited unless residents resolve to have them audited by special resolution).
• Residents’ committees no longer have a role in dispute resolution or maintenance charge increases. Model rules for committees are to be developed by Consumer Affairs Victoria.
• Operators cannot unreasonably refuse pets.

Repairs and Maintenance

• Operators will be responsible for items of capital, which include any building, structures, plant and equipment in the village, unless owned by the resident. The operator may use funds from maintenance charges or a separate maintenance fund (comprising a portion of the maintenance charge) to pay for the repair and maintenance of these items in accordance with a maintenance plan.
• Operators will be responsible for funding any capital replacements.
• A maintenance plan that sets out the items of capital which will require repair and replacement over a period of 10 years will be required where maintenance charges are used to fund capital maintenance at the village.
• Residents may request alterations and modifications to their unit, subject to the operator’s consent (which must not be unreasonably withheld).Residence contracts with owner residents must not provide for the alteration or reinstatement of the premises.

Refurbishment/Reinstatement

• The obligation of a resident upon exiting the unit is limited to ensuring the premises are reasonably clean and are reinstated to their condition upon entry, excluding fair wear and tear (which includes a deterioration in the condition caused by the reasonable use of the premises or natural environmental forces).
• However, the resident and operator may agree to renovate the premises and, if so, the operator must carry out that renovation within a certain timeframe. The cost of renovation is to be borne between the resident and operator in the same proportion as the share of the capital gain and loss.

Disputes and Termination

• Before an operator may serve a notice of termination on the grounds of a breach the operator must take into consideration whether it is reasonable and proportionate to serve a notice, having regard to balancing the effect the notice will have on the health and safety of the resident and the risk to another resident or the operator, employer or contractor of the operator, or their visitors.
• Before an operator may serve a notice of termination on health grounds the operator must apply to VCAT for approval.
• Internal dispute resolution requirements will remain largely the same. However, there will be a new external alternative dispute resolution scheme within the Department of Government Services.It will primarily provide conciliation of disputes between residents and between operators and residents.

Aged Care Funding

• Non-owner residents can request funding for aged care daily accommodation payments and alternative accommodation payments (including a payment under a residential tenancy agreement and an entry payment for another retirement village made in the prescribed circumstances), up to a prescribed cap. The prescribed information is to be detailed in new Regulations.

Code of Practice

• The Bill introduces the power for Regulations to be made to create a Code of Practice.Details in relation to the Code of Practice are not yet available; however, the Bill does refer to a Code of Practice covering matters such as disclosures and marketing, village operation and administration, requirements to pay fees upon vacant possession, renovation, refurbishment and reinstatement requirements and good practice in dealing with disputes, among other things.

Most of the amendments which will impact financial matters, such as deferred fees, exit entitlements, recurrent charges ceasing and maintenance and repair obligations, will be prospective. However, requirements in relation to village operations, contract checks, termination of contracts and disputes will apply to existing contracts.

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