A formal Parliamentary Inquiry into the retirement housing sector, following a sustained campaign from consumer advocates in the sector, is currently being conducted in Victoria. Consumer Action Law Centre’s Gerard Brody takes a look at some of the big issues being debated.
It is impossible not to be impressed with the retirement housing residents that have shared their story with the Inquiry so far. Their strength to stand up for themselves, their neighbours and for fairer laws means that Victoria’s Parliamentarians have heard first-hand the difficulties that so many face with their most important asset – their home.
With over 750 written submissions, mostly from residents, and over 50 witnesses already giving evidence, the politicians on the Inquiry have been given a crash course of the complex and unfair legislative and regulatory environment of the retirement housing sector.
Complexity is one of the prime drivers of bad financial and personal outcomes for residents. For instance, in Victoria, retirement housing contracts can be extremely complex, with lengthy documentation and many different forms of legal tenancy. Even if legal advice is sought, the necessary legal expertise may not be accessible to residents.
If you aren’t aware of all the details hidden in your contract, you or your family might get a rude shock when it is time to sell up or move on. But it can be fixed. We think enshrining the concept of ‘no surprises’ would be a good start.
In our thinking, ‘no surprises’ means contracts presented in plain English, which can be easily understood by those entering them – and which can be used to effectively compare retirement housing options, so that residents can move into their new home with certainty. We suggested to the Inquiry that a good start might be standard form contracts, which are already used in the sale of land contracts.
But we also need fees that are fair, affordable and relate to genuine operating costs, as well as financial transparency so residents can see exactly where their money is going. This means thoroughly investigating the notorious Deferred Management Fee (DMF) business model.
As it stands, the DMF can be abused too easily, with DMFs contributing to developer profits rather than village service and amenity, leaving elderly residents financially exploited. High DMFs can mean that residents feel locked into villages, unable to leave due to the cost.
Sadly, though, many operators giving evidence at the Inquiry continue to argue that everything is fine. While this may be true for some residents, the number of submissions to the contrary suggests otherwise, and our legal practice has found that the sector is not well suited to resolve disputes when they arise.
Under the current rules, sorting out disputes and complaints is a long, complicated and expensive process. This deters many residents from taking formal legal action – despite having genuine grievances. This is a barrier to justice, and condemns many older Victorians to live with the consequences.
It is vital that proper protections are in place to ensure that all residents enjoy a system that is fair, and resident-centred. It is apparent from the many submissions to the Inquiry that an independent Retirement Housing Ombudsman service is required to quickly and cheaply resolve issues when they arise – and to make binding decisions, with which operators must comply. Importantly, an Ombudsman can take action in response to systemic problems, thereby preventing complaints from occurring in the first place.
While we are hoping for lasting reform to the sector, the Inquiry has already brought a new awareness and focus to Parliament of the issues faced by older Victorians living in retirement housing. It was the residents who made this Inquiry happen – they lobbied their local MPs and demanded action. It shows me that regardless of who you are, you should speak out when you see or experience injustice.
And just sometimes, powerful people will listen.
For more information visit Consumeraction.org.au