29 June 2017

Five years after Queensland’s 2012 review of its Retirement Villages Act Queensland still has much work to do to protect existing and prospective village residents.

Specifically, the Government needs to make decision-making easier for prospective residents’ by prescribing a standard contract for retirement village operators according to QUT property and law experts.

QUT property economist Dr Andrea Blake and senior law lecturer Dr Lucy Cradduck say crucial information on exit fees and profits or losses from unit sales are often buried in extremely long contracts, with elderly buyers unlikely to read every word or pay for a solicitor to check it.

“They often think it’s the same as buying a normal house or apartment but retirement villages are completely different beasts,” Dr Blake said.

“Despite the sector being heavily regulated there is still a lack of understanding of the essential elements of the structure by prospective purchasers.”

Four Corners’ report on Monday night highlighted the inequities of retirement village structures and contracts experienced by some residents.

Five years ago Dr Cradduck and Dr Blake made five recommendations in their submission to the Queensland Governments’ 2012 Review of the Retirement Villages Act 1999.

These included that the Act should prescribe a shorter, easier-to-understand format for Public Information Documents, with these PIDs having to be made available on retirement village websites. As Dr Cradduck stated in her oral submissions to the 2012 review “[a]n issue that all prospective residents face is that it is not easy to obtain the necessary information with which to make a comparison between the villages, both as to the tenure type and fees that attach and also to the other lifestyle facilities and fees…”

The QUT researchers also called for the Act to ban retirement village operators from charging exit fees unless they could show that their residents had in fact obtained legal and financial advice before signing any agreement. Despite changes to Queensland’s Retirement Villages Act in 2011 and 2016 (regarding the calculation and payment of exit fees) the residents remain at a disadvantage.

“Nothing has changed – we still have these really complex arrangements and contracts that people don’t understand,” Dr Blake said “and PIDs still are not easily accessible.”

“Buying into a village can work for people if they are going to spend their whole retirement life in that village.  But if their circumstances change, or if it’s not what the glossy marketing brochure promised, or if they have to get out of the village to access care if their health deteriorates – that’s when the sting occurs.

“The structure at the moment works against anyone who wants or needs to leave the village in the short term – it just erodes their capital.  The system needs to change so that the developers can still make money from their business but the residents aren’t so disadvantaged.

Dr Cradduck said retirement villages in Queensland were offered on a variety of tenure types, including permit to occupy, licence, rental and leasehold.

"Most villages have a website to provide information about their village and village life however this does not mean that all relevant information is available to prospective residents at the click of a mouse," Dr Cradduck said.

"Despite legislated disclosure obligations; as Four Corners’ highlighted many retirement village residents and their families remain unclear about the interest held, fees payable during their occupation, and the fees payable to the village operator when the resident needs to leave."

Dr Cradduck said existing disclosure obligations under the Retirement Villages Act 1999 (Qld) resulted in documents that were lengthy, complex and legalistic.

"Without legal advice these documents can be hard, if not impossible, for the average person to properly understand. And most villages still do not make this information available on their website," she said.

“We believe a standard form contract for all Queensland retirement villages, will go a long way to empowering prospective residents – and their families – by enabling them to easily compare and interpret the fine print across villages.”

Dr Blake and Dr Cradduck’s five recommendations in their submission to the Queensland Governments’ 2012 Review of the Retirement Villages Act 1999:
Recommendation 1: Amend the RVA (Retirement Villages Act) to prescribe a shorter and easier to understand format for PIDs (Public Information Documents), with the tenure [i.e. freehold/leasehold/licence/other and term as applicable], any participation in capital gain/loss and exit fees being clearly stated.
Recommendation 2: Amend the RVA to require a copy of the lease/licence and/or other accommodation terms or RV rules attached to the PID, or otherwise to form part of it, be provided as clearly identified separate documents.
Recommendation 3: Amend the RVA to require that legal and financial advice must be obtained by prospective residents before entry into any RV agreement; with confirmation of receipt of that advice to be provided to the RV operator prior to signing of any agreement.  The consequence of a failure by the RV operator to obtain such documents could be that the RV operator would be precluded from charging an exit fee to the resident. The onus being for the RV operator to show advice was provided to the prospective resident at the relevant time.
Recommendation 4: Amend the RVA to prohibit RV operators from passing on any costs associated with the RV agreement (other than the actual Titles Office registration fee for a resident’s lease) to the resident.

Recommendation 5: Amend the RVA to require any RV with a website must make a copy of its current PID freely accessible online.


Media contacts: - Mechelle McMahon, QUT media officer,
 or Rose Trapnell, QUT media team leader, 0407 585 901

Dr Andrea Blake and Dr Lucy Cradduck say the Queensland Government needs to prescribe a standard contract for retirement village operators.