In the second rollout of new regulations following the Greiner Inquiry, the NSW Minister for Better Regulation, Matt Kean, has announced through The Sydney Morning Herald that “we’re placing a 42-day limit on the length of time villages can charge for general services after someone leaves”.
Village operators will now also be required to pay back departing residents the value of their home within six months in metropolitan areas and 12 months in regional areas.
The detail is still being prepared, including whether it will be retrospective with existing contracts. It will come into effect 1 July.
The 42-day (6-week) limit will not please operators. According to the RLC/PwC annual benchmark survey, the average village home is vacant for over 300 days or 43 weeks, meaning the operator will have to contribute roughly $75 a week for 37 weeks – or $2775 per home.
A 100-home village with 10% annual turnover will cost the operator $27,750.
If they have to buy the home back after 26 weeks – with the average home being valued at $400,000 – the operator will be carrying an average of 10 homes requiring $4 million capital or loans for 17 weeks. At 5% interest this equates to $65,000.
Jim Gibbons, President of the NSW Retirement Village Residents Association, questions who will do the valuation of the market value. He wants it to be independent.
How will this be achieved when village operators, in nearly all cases, handle the sale?
(Interesting fact: Jim Gibbons knows his stuff. A resident of a Living Choice retirement village, he was the first Chief Administration Officer of Consumer Affairs in NSW, appointed in 1975 and went on to be Assistant Commissioner in 1985. He understands how to advocate as well. Before retiring he was the Executive Director of the Motor Traders Association – the largest industry Association in the country.
You can learn from Jim at our LEADERS SUMMIT where he will speak on Village Managers – a must attend session).