Calls for fairness in the retirement housing sector

Gerard Brody looks at the issues facing retirement village residents.

Calls for fairness in the retirement housing sector

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

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    COMMENTS

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    MICK
    1st Dec 2016
    12:37pm
    A few years back I tried to get my elderly mother into a retirement village. As I read all contracts I did likewise with this one. I was horrified and it sounded more like fraud rather than a contract. We walked away and my mother has stayed on in her house. The best option for all but the informed.
    Avoid this industry if you can. It is a casino which will burn you and your children should you leave them your estate.
    Sen.Cit.90
    1st Dec 2016
    2:25pm
    I wish you had read mine Mick; I did get a solicitor to read it but I didn't get to know all the pit-falls. I must lose 30% of the gross if I sell; I'm expected to pay for refurbishing of the Unit. I have lived frugally and saved the expected 30% to enable me to buy into a decent care facility when he time comes; I was hit by the DSS for $686.00 for alleged over payment of my age pension and also had my pension reduced slightly. I do receive quite a small pension payment monthly from the UK system which unrealised by me brought my income over the threshold.
    At aged 87 buying into this Unit was the biggest mistake I've ever made (like all I've made other mistakes)
    Charlie
    1st Dec 2016
    1:04pm
    I am not too sure what they mean by retirement housing, but there was a government affordable housing scheme that was scrapped a year or two ago. I mean in addition to the local dept of housing offerings.

    A person who was living in poverty was able to put their name on a list and apply to rent houses and flats that were rent reduced to make them affordable to somebody on benefits or the pension.

    Its a pity it was scrapped because it was absolutely necessary at the time and it still is, however, it was open to manipulation by estate agents. Clearly property managers don't want rentals held down if an area begins to prosper and they can up the rent. So if the government is paying the difference they have to put in more money or up the pension.

    Prior to this, estate agent were beginning to make their own rules and exclude people on low income from their list of successful applicants, if they deemed that the person on low income could not afford the rent.

    At the time there was a certain percentage of income put up, that the person had to be earning above the cost of the rent. What was unfair about it, was that according to the rental market at the time, a person living on the age pension, would be excluded from renting anything more than a large room. Sometimes known as a bed sitter.

    I think the rental property market out there is not good for pensioners, particularly when you get into places with temperature extremes and the cost of heating and cooling goes through the roof because many properties asking for high rent, do not have proper roof and ceiling insulation.

    I would not stop at saying that in some places, an aboriginal has more chance of getting good accommodation for low rent than a white age pensioner, but I am not allowed to say that because some people would say its racist.
    Old Man
    1st Dec 2016
    3:54pm
    I believe that there should be free legal advice to those who wish to go into retirement villages. I'm sure that the cost of legal advice is stopping some elderly people from a full investigation of their rights. It's OK to say that there should be no traps and a plain English document but a sweet talking salesperson can allay any fears whether it's the truth or not. My wife and I looked at a retirement village next to a railway line and were told two lies. Firstly we were told that the shopping area had approval for a rebuild which was happening very soon and the rail line was a little used spur. The truth was that the shopping centre was dying and there were no plans to change it and the rail line was the main Sydney/Brisbane line. When challenged the salesperson admitted that she was from interstate and wasn't 100% up to date.
    TREBOR
    1st Dec 2016
    4:35pm
    It does seem that the name of the game is to make it so difficult that your ordinary punter (sic) simply cannot understand it, and to ensure that all the cards are dealt into the hands of the operators of these facilities. Hardly a 'co-operative' or 'mutual' venture at all.

    When you understand that the nature of these facilities in private hands is to ensure profit - then you can readily see why and how this sector, along with many others, has fallen by the wayside when it comes to providing a service to people.
    Tarzan
    1st Dec 2016
    4:35pm
    I am very happy living in a retirement village, I made sure that we had our own title, which most don't give you, remember no title no buy. Make sure that you understand the body corporate rules, make sure that there is sufficient money in the accounts to meet current and future expenditure and you should be right Beware of body corporates where the majority of owners are non residents or investors as they are only interested in a return on money invested and not in the way that the complex is run. The body corporate fees are reduced, maintenance is neglected and the accounts are run down with nothing in reserve. The value of your asset then reduces and you could have trouble selling only because you didn't do your homework.
    Radish
    1st Dec 2016
    5:33pm
    The RAAF has not for profit retirement villages here in WA and from all accounts those who live in them are very happy. Long waiting lists to get in...so that tells you something surely.

    Their contract is apparently very transparent and straight forward.

    Sometimes it is not all about money; quality and enjoyment of life in your later years I believe is more important.

    Let's face it you die and it all stays behind; the SKI club is growing in membership every year and if your kids dont get as much ...so be it.
    Not a Bludger
    1st Dec 2016
    5:35pm
    Stop grizzling - as always, and as it should be, let the buyer beware.
    If it looks too good, it probably is.
    Don't ask me to pay for those who do not do their homework and make a poor decision, and neither should the State - particularly with my tax paid money.
    Not Senile Yet!
    1st Dec 2016
    8:19pm
    To not a bludger....the Don't ask me to pay thru my taxes.....is a Political copy from American Politicians!
    It's named Propaganda....to sell you the selfish idea....that it's ALL ABOUT ME!
    If you want American User pays system/society....which by the way is failing....then move there!
    This is Australia Mate! We can do better!
    But to do so....you have to compromise on some things....and caring about the Aged...is good place to Start!
    Who do you think paid for and probably built with labours.....ALL THE INFRASTRUCTURE ....like roads...rail...Governments Offices...BOTH STATE & FEDERAL????
    Not you....more than two thirds were built when you were still in Nappies!
    As for the Private Sector.....who's hard earned money helped make them successful by buying their products???
    The Aged Pensioners have earnt the right to be treated with respect & protected!
    They provided you & yours all the taxes that built the Infrastructures that You take for Granted....and Yes....it was not just for themseves.....I don't see any Toll Gates on them...nor do I see any restrictions to the Younger Generations.....on the basis that they didn't Pay For Them!
    Get your Brain working better....by feeding it wholesome facts and information....instead of the Pollies Propaganda!
    Put crap in....and only Crap can come back out....they say!
    Anonymous
    4th Dec 2016
    7:02pm
    not senile yet, it obvious hurts when confronted by the truth, if it looks too good, it's more likely then not it is, if you think all these developers, solicitors, banks etc, do this out of the good of their hearts you are sadly mistaken, their wallets come first, second and third!!! just read the comments of labor mick, old man and tarzan as an example of what is going on in the real world before going on a rant and tantrum about factors not even related to the item in this column.
    Tommo
    5th Dec 2016
    12:17pm
    This article is about " retirement " living, the inquiry also covers the " lifestyle " type living. Yes, you do have to go into a village with your eyes open, however, in moving to a lifestyle village, you are covered by consumer affairs as most lifestyle villages come under the guidelines of " caravan parks ". You can obtain the information from Consumer affairs Victoria. The publications are " Caravan parks - A guide for residents, owners and managers " and the publication " movable dwellings - a guide for residents, owners and managers. We reside in a village, and the safety, friendship and management are second to none - yes, it is different to living " outside " but to use the expression " eyes wide open " you cant go wrong. There is a huge difference between " retirement " village and relocatable " lifestyle " village - so do your home work, you will be pleasantly surprised at the difference. My wife and I would not have it any other way.


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