The Retirement Villages Amendment Act 2023 (Amending Act) came into force on 27 November 2023, amending the Retirement Villages Act 2004 (Principal Act).
Most retirement villages include a “recurrent charge” within the residence contract, payable by the resident. The recurrent charge typically relates to costs incurred by the operator in operating the village, including services the operator may provide to the residents as part of the residence contract. A residence contract may also allow an operator to charge a “levy”. A levy is a one-off charge relating to a particular expenditure by the operator.
The Amending Act places new rules on an operator’s ability to increase recurrent charges and impose levies on residents.
A summary of the key amendments is set out below.
Meetings convened by an operator
The operator of a retirement village must keep accurate minutes of any meetings of residents and tenants that are run by the operator, and they must ensure the following information is specifically included in those minutes:
- Questions asked by residents and tenants at the meeting.
- Answers given by the operator, or representation of an operator for questions asked.
The operator of a retirement village must also allow the residents to inspect the minutes from the meeting for 30 days following that meeting and arrange for the minutes to be given to residents at the next meeting convened by the operator.
Recurrent charges (those paid on an ongoing basis)
An increase to recurrent charges can be imposed by an operator if it can be demonstrably shown to be necessary having regard to previous financial reports and future forecasts. However, there are new restrictions that only allow a fee increase above the CPI increase for the preceding period if one of the following additional requirements are met:
- 65% of residents vote in favour of the increase; or
- The increase is required because of:
- the increase in rates, taxes or charges regarding the retirement village land;
- the increase is based on an increase in the salaries/wages of staff; or
- the increase is based on an increase in insurance premiums or excesses paid, related to the retirement village or its use.
The onus is now on an operator to obtain approval from the Tasmanian Civil and Administrative Tribunal (TASCAT) to increase recurrent charges, except in the circumstances above.
A levy can be imposed on residents for purposes authorised by the residence contract (or any village rules established under a residence contract). A levy can only otherwise be imposed where the residents authorise it by a special resolution or in circumstances where:
- a levy (unless otherwise permitted) has not been imposed on the residents of the retirement village in the immediately preceding 12 months; and
- the expenditure which the levy is intended to cover is payable either because of the requirements of an Act or the order of a court or tribunal.
What you should do
Operators of retirement villages should familiarise themselves with the amendments to the Principal Act and consider updating their residence contracts to ensure that they are consistent with their new obligations. Significant financial penalties now exist if an operator seeks to increase recurrent charges or impose a levy on residents in circumstances where they are not permitted to do so under the Principal Act.
If you have any queries regarding this article or require any assistance with reviewing and amending documents, please contact:
M: 0418 791 879
Published: 22 January 2024