Daniel Gannon is warning village operators to be aware that state governments are looking to impose 12-month mandated buybacks for retirement living operators. This could leave just 90 days to sell a village home before a full buyback is required.
The Property Council’s Retirement Living Council Executive Director said trouble could be on the horizon, because the average number of days between vacant possession and settlement of ILUs nationally has increased by 30 days (or an increase of 13%) from 223 to 253 days over the 18 months to December 2022.
In simple terms, the average time on market has ballooned out to more than eight months rather than trending shorter.
Under a scenario where a mandated buyback was 12 months from vacant possession, this would only leave approximately three months to agree a valuation, source contractor quotes, engage said contractor, source materials, carry out refurbishment works, and market the unit for sale.
The RLC is working with residents and governments in Victoria, Western Australia, Queensland, Tasmania and South Australia on legislative reforms, with 12-month buybacks a common reform topic.
Daniel said the RLC is supportive of a consumer-focused 12-month buyback framework where the clock starts ticking at the point a unit is ready for sale, not from vacant possession.
“There's a number of important reasons for this, namely supply chain uncertainty, delays in sourcing materials and labour, and agreeing valuations during challenging times for families,” he said.
These timeframes are important, along with an 'all weather' approach to regulations to ensure operators can continue to operate.
The SOURCE: Many operators offer buyback timeframes shorter than 12 months, but smaller operators in regional areas may be put in financial jeopardy by a 12-month mandated buyback from vacant possession.
