As we discussed in our December Insight – New Regulations for the Retirement Villages Sector – 2019 would be a year of change to Retirement Village legislation in Queensland.
A number of amendments to the Retirement Villages Act 1999 were released in February this year, including greater clarity and transparency around exit fees and shorter settlement times, a fairer dispute resolution process, and the controversial buy-back scheme. Final amendments will commence in November, with changes being implemented through till 2020 as relevant associated forms and regulations are made available.
New changes will introduce:
- plans for changes to village operations, including redevelopment, closure or transition to a new scheme operator
- more standardised residence contracts
- standardised financial reporting and budgeting requirements for retirement villages
From 11 November 2019, compliance with the following amendments is required:
Operators who propose to redevelop a village (including major works such as – renovation, repurposing, demolition or construction of a building, structure, or village greenspace/grounds) without halting operations must prepare and comply with an approved redevelopment plan. An exception to this requirement applies where every village resident is given written notice in their contract and/or associated documents of the proposed works before becoming a resident – for example in the case of a new, unfinished redevelopment allowing residents access before completion.
Village Sale/Control Transition
Operators wishing to sell or transition control of a village’s operation must prepare and comply with an approved transition plan. The updated RV Act will detail the procedure for approval of these plans for contracts signed after 11 November 2019, and does not apply prior.
Operators proposing to close a village – either temporarily or permanently – must prepare and comply with an approved closure plan. Closure plans will need to be in the approved form and be approved either by special resolution of residents or the Department. The RV Act will set out a detailed procedure for having closure plans approved.
General Services Charges (GSC)
From 11 November 2019, it is a mandatory requirement that all operators establish a separate GSC fund and bank account to be used exclusively for providing general services. To date this fund has prohibited operators from claiming costs awarded by QCAT against the operator and will now also include any legal costs incurred in resolution of a retirement village issue or dispute (S169-171/173 of The Act).
Currently, operators must also pay the GSC for unoccupied or non-contracted units. From 11 November 2019, this obligation will be extended to units “under construction” or “being renovated”, although these terms are yet to be properly defined.
Maintenance Reserve Fund (MRF)
Maintenance Reserve Fund (MRF) contributions will no longer be treated as part of the GSC. As a result, MRF contributions will no longer help to satisfy the CPI limit for total GSC in a financial year period.
As for allocating MRF funds, operators will now be required to adhere to all of their quantity surveyor’s report recommendations, except where agreed by special resolution of the village residents, with any resident able to request a copy of the draft MRF budget. Failure to comply will attract a pecuniary penalty.
Currently, quarterly financial statements must be given to a resident upon request. From 11 November 2019, operators will not be obliged to provide a quarterly financial statement that relates to a quarter earlier than the last two completed financial years.
The quarterly and annual financial statements will need to include income of the GSC Fund (in addition to expenditure, as currently required). For quarterly financial statements, this will only apply for the March 2020 quarter onwards.
The Department of Housing and Public Works may now apply to the District Court to have a manager appointed for a village in the event of operator breaches of requirements related to redevelopment, transition and closure plans. The appointed manager’s role and associated expenses will be provisioned in more detail in coming months.
Beyond the changes taking effect in November, new approved forms which operators will be required to use will be released over the coming months, including:
- Standardised Residence Contract – including mandatory and prohibited terms
- Quarterly and Annual Financial Statements
- GSC, MRF and Capital Replacement Fund Budgets
- Notice of intention to transfer control of a village’s operation
- Notice of discontinuation of transfer of control
- Notice to the Department of intention to close a village
- Residents meeting notice, regarding a proposed village closure
- Notice of discontinuation of village closure
- Residents meeting notice, regarding a proposed redevelopment; and
- Notice of discontinuation of redevelopment.
From now, village operators should be reviewing their current documents to ensure they remain consistent with all legislative changes, including updating wording to contractual and/or disclosure documents to comply with notification requirements around development, transfer and closure of their village. In addition, operators should ensure all financial statements and village operational budgets are compliant with changed requirements.
We will keep you informed as new approved forms/requirements are released. If you require assistance in ensuring your village is compliant with new changes to legislation, contact our expert RV team.