South Austalia's retirement living sector under serious threat
The Property Council of Australia has condemned a State Government proposal to impose a statutory buy-back mechanism in the draft Retirement Villages Bill, to be tabled today.
A buy-back mechanism would mean that operators of retirement villages would be forced to mandatorily buy-back residents’ homes if a residence could not be sold within 18 months.
SA Executive Director of the Property Council Daniel Gannon said South Australia cannot afford policies that damage job creation and investment.
“Make no mistake, the State Government’s statutory buy-back policy is anti-jobs, anti-growth, anti-housing choice, anti-residents and anti-common sense,” he said.
“The property and retirement living sectors are appalled by this proposal to take a sledgehammer to a sector which reports extraordinarily high resident satisfaction.”
Mr Gannon said the PwC census cited in Grant Thornton’s 2014 research shows that the majority of residents are very happy in their villages. Moreover, the McCrindle Baynes Village Census Report (2013-2014) found that 98% of people who had moved into a village in the last 23 months stated they would make the same decision to move into a village if they were given the decision over again.
“This decision, if supported by Parliament, will smash local operators with a compulsory buy-back and make residents’ units worth less, which is bad news for people living in retirement villages,” he said.
“It seems the Premier’s economic priorities have been overlooked, as this policy runs contrary to most of them and puts South Australia at a serious disadvantage when it comes to attracting investment. We need investment and we need housing choices for older people.
“This isn’t just red-tape – it’s a straitjacket for the sector in an economic climate that sorely needs economic growth and job creation.”
Mr Gannon said research published by Grant Thornton in October 2014 demonstrates that retirement villages contribute significant savings to all levels of Government.
“$2.16 billion in savings to the health care system. $1.98 billion of these savings are achieved by retirement villages delaying residents’ entry into Government funded aged care facilities.”
“The Government has provided no evidence on the reasons why residents leave retirement villages. Firsthand knowledge from operators reveals that aged care entry or death of the resident are overwhelmingly the main reasons why residents leave retirement villages,” said Mr Gannon.
“The 2013-2014 McCrindle Baynes Census found that 93% of residents surveyed felt that their decision to move into a village had been a good financial decision.
“Therefore, the Government’s 18 month buy-back provision would in most cases benefit the estate rather than residents themselves. Put simply, this is not good policy.”
Furthermore, the Property Council is disappointed and concerned by the significant delay in introducing this Bill.
Mr Gannon said that uncertainty around regulation of the industry makes it difficult for operators to prepare their budgets and frame their contractual arrangements, making South Australia a less attractive investment destination for retirement village operators.