Will QLD follow NSW on demanding asset management plans? State Govt opens consultation on financial reporting and budgeting standards for retirement villages

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The Queensland Government appears to be taking a cue from NSW with its latest round of legislative changes looking at putting in place a $1,000 threshold on major village capital items (down from $10,000) and new standard resident contracts by mid-2022.

As we reported in Issue 4 of SATURDAY, the NSW Government introduced four key legislative changes for the village sector in the wake of the Greiner review, including a requirement for each village to have an asset management plan (AMP).

The change – due to start 1 September – requires operators to establish a 10-year plan detailing how major items of capital priced at $1,000 and above will be maintained and repaired.

QLD is also looking to a tight deadline for their changes.

The regulations will be developed by late 2021 with the changes due to come into effect around six months afterwards – so by mid-2022 at the latest.

The detail

You can read the 33-page draft regulation for minimum standards for financial reporting and budgeting here.

The Retirement Villages (Annual Financial Statements and Other Matters) Amendment Regulation 2021 proposes amending the Retirement Villages Regulation 2018 to require:

  • A statement for the general services charges fund
  • A balance sheet showing the assets of the retirement village as at the end of the financial year.
  • The balance of the bank accounts for the capital replacement fund, the maintenance reserve fund and the general services charges fund.
  • Accounting disclosure notes for capital replacement fund, maintenance reserve fund and general services charges fund

Note that the minimum reporting threshold being considered is $1,000 – a drop on the previous $10,000 threshold.

The use of Quantity Surveyors is also canvassed in the proposed regulation.

Contract changes

You can read the separate 47-page consultation paper for standardised residents’ contracts here.

It outlines an approach for more standardised residence contracts using a combination of additional prescribed content, required terms and prohibited terms – saying consistency in all resident contracts will help ensure clarity about these matters and prevent disputes.

“These matters have been the subject of misunderstandings between residents and operators and are potential triggers for resident stress. Such stress can be detrimental, negatively impacting the health and wellbeing of residents,” the paper states.

However, the proposed required terms are only intended to apply to new contracts that are entered after the regulation comes into effect.

“Nothing will prevent operators and residents agreeing to their own additional terms about the issues covered by the required terms, provided these are not inconsistent with the required terms or the Act,” the paper states.

The prohibited terms for residence contracts will apply to both existing and new contracts.

A standard form

The paper also includes an approved form that puts forward a standard structure for contracts through headings and tables – and it suggests that the QLD Government is learning some lessons from the strict approach of NSW.

“Some stakeholders advise that a strict standard contract such as that adopted in New South Wales, can inadvertently result in complex and lengthy contracts and prevent the rights and responsibilities of residents and operators from being clearly outlined,” it reads.

“For example, if a standard form contract specifies terms about common fees and charges, and the village provides additional services not contemplated by the standard contract, then the fees and charges for these may be forced into another part of the contract. As a result, the prospective resident needs to search several parts of the contract and attachments to see the complete picture of payments required by the village.”

This proposed new approved form would also only apply to new contracts entered once it comes into effect.

Little time to make submissions

On face value, the QLD legislation does not seem to have taken the same tough stance as NSW.

But it is a sign that where NSW leads, other states follow.

Providers have also been given little time to respond – just a week from today.

Feedback on both pieces of proposed regulation is due on 15 June and can be made via the following email: RVConsult@hpw.qld.gov.au.