Retirement village exit rules changed

New legislation means that NSW retirement village contracts will now include a timeframe that ensures timely payments for a former resident’s exit entitlements.

These changes apply only to registered interest holders with a long-term registered lease that gives them at least 50% of any capital gain.

They do not apply to:
• registered interest holders who own a lot in a strata or community scheme village or own shares in a company title or trust village that gives them their resident right; or
• unregistered interest holders.

New retirement village laws started in January 2021. The changes reflect complaints made about how exit entitlements were previously managed and provide a timeframe for former residents to receive their exit entitlements. Summarised, the changes:
• enable residents to receive exit entitlement money before their unit sells (if the sale has been ‘unreasonably delayed’);
• provide an option for residents to fund their move into aged care by accessing part of their estimated exit entitlement money;
• ensure residents no longer have to pay ongoing charges for general services for more than 42 days after they leave the retirement village (commences on 1 July 2021 onwards).

New legislation has been introduced which affects existing and all new retirement village contracts. Previously registered interest holders had to wait until a new resident either moved into or leased their old unit before they were able to receive their share of the sale proceeds (the “exit entitlements”). This could mean that if the village operator delayed the sale of a unit after the resident left, the former might not receive their exit entitlements for anywhere between two and five years.

Under the new legislation, a registered interest holder can apply to the Secretary of the Department of Finance, Services and Innovation for an exit entitlement order directing the village operator to pay the exit entitlements to the former resident even though the unit has not sold. The order can require payment after six months for Sydney metropolitan, Wollongong and Blue Mountains residences and within one year anywhere else in NSW. This order will only be made if the village operator has “unreasonably delayed” the sale considering the time taken to refurbish the unit and whether the operator as selling agent has performed all their duties within reasonable time.

Such an application can only be made by a former resident but not their estate. If the order is made, the exit entitlement must be paid with 30 days of the order.

If the registered interest holder moves out of the retirement village into a residential aged care facility and has not received their exit entitlement, the resident may ask that the operator make one or more daily accommodation payments to the facility on behalf of the resident within 28 days of the resident’s request. As more than 60% of residents move directly into aged care, their move can be delayed if they do not have access to funds to pay the daily accommodation payments to the facility and the unit does not sell quickly. These amendments are intended to make the transfer easier for residents and family members.

For more detail, see Fair Trading website, https://www.fairtrading.nsw.gov.au/about-fair-trading/legislation-and-publications/changes-to-legislation/changes-to-retirement-village-laws

Community attitudes to aged care explored

Following In-depth interviews and focus groups, the Royal Commission into Aged Care Quality and Safety has released a report, They look after you, you look after them: Community attitudes to ageing and aged care .

The researchers interviewed a range of focus groups to identify current community attitudes to ageing; community understanding of the aged care system and how individuals were planning for their own older age. Interviews were conducted with both younger and older people, diverse economic groups, Indigenous and culturally diverse groups and younger people with disabilities who already resided in aged care facilities.

Written before the pandemic, the report explores how people view entering an aged care facility, what their expectations were and most relevantly, what were the experiences of actual residents.

Post-Covid, the relatively negative comments of most interviewees about their fear of entering the aged care system, seems justified in light of the relatively high number of deaths in care facilities which appear to reflect the inadequate training and equipment available to care for older people.

The report found that as people became older, they were better informed about the complexities of the aged care system but they remained concerned about the cost and quality of care provided. There was a widespread, strong preference across the different age groups and communities to remain living independently as they age and making use of support to do so.

Most interviewees were critical of aged care facilities and saw them as being run as businesses that prioritised profit over high quality care. The prevalence of religiously affiliated organisations running facilities was seen as effectively limiting their choices, as they did not want to spend their older years living in an institution run by a religious body.

Most people described aged care facilities negatively, saying they were depressing, bleak places that felt clinical and sometimes were overcrowded. Moving to aged care was seen as ‘the beginning of the end’ that precipitated a rapid decline in one’s life expectancy and quality of life.

Specific negative factors mentioned included a lack of meaningful mental stimulation, social isolation and loneliness, poor quality personal care, insufficient staffing levels and staff training, and poor quality nutrition. These factors were interrelated with overstretched staff rushing residents through meals and personal care.

While some interviewees mentioned pleasant high end facilities, others mentioned budget facilities that provided a small per resident food budget, or residents being heavily sedated to reduce staff workload. The effect of having to provide a bond to ensure a place in a facility and the ongoing cost was of great concern to most as was the inadequate regulatory system.

Younger people with physical or mental disabilities living in aged care facilities were particularly critical of the care they received, mentioning issues of cleanliness, personal hygiene, stimulation and respect for residents and appropriate social engagement.

This qualitative research included 274 people from the general community and targeted diversity groups. It was conducted primarily to understand the perspectives of these diversity groups and to complement a national survey for the Royal Commission that has been charged with considering the design of Australia’s future aged care system.