Major changes commenced in February 2019. These aimed to increase the disclosure of relevant information to purchasers and provide greater transparency and certainty.
This month’s changes are directed primarily at retirement village operators and are designed to ensure clarity and accountability in relation to certain financial aspects of running a retirement village.
Operators are now required to create and maintain separate bank accounts for monies paid by residents by way of general services charges, maintenance reserves, and capital replacement.
These separate accounts must be used only for the specific purpose for which they are designed and are not to be a general bucket of money for any purpose the operator sees fit.
A standard form of document for general services, capital replacement and maintenance reserve budgets, and for annual financial statements, is in the pipeline.
It is all designed to provide greater accountability by the operators, and greater transparency for the residents.
Resident committees and residents themselves will have the ability to seek explanation of increases in charges and seek better understanding of relevant financial information in the running of their retirement village.
The new changes also give input to resident committees in relation to any proposed redevelopment of villages, including change of use of a building within the village, as well as demolition or construction of buildings.
Retirement villages are increasingly the lifestyle choice that older people are opting for, and the industry has in past years been subject to criticism in relation to disclosure and understanding by purchasers.
The regime that has been rolled out in 2019, and which is continuing, is designed to ensure that prospective purchasers and residents of retirement villages, are provided with extensive disclosure and a better understanding of their rights and obligations.