The legislative landscape guiding and governing Australia’s retirement and seniors’ living industry stands congested with a mixture of bills, amendments and policies under consideration.
This congestion creates both risk and opportunity for operators and investors. But they require careful navigation to avoid unintended consequences amid a housing crisis.
Here, Retirement Living Council Executive Director Daniel Gannon explains what you need to know about the legal and policy changes in play, and what it all means.
Prioritise housing options for older Australians
As revealed in the 2023 Intergenerational Report, there are 4.6 million people around Australia aged over 65 today – this number will grow to 7.1 million by 2043.
This population shift will have socio-economic impacts on Australia, including the housing supply shortage and the pressure on an already struggling residential aged care sector.
These are considerations that should be a high priority for policymakers and legislators.
But unfortunately, retirement communities are often confused with aged care – and sometimes by these same legislators who should know better.
If you only take away one message from this article, let it be this – retirement communities and aged care are not the same thing.
Retirement communities offer a unique housing option that enhances wellbeing and lifespan for older Australians, and delays – and can prevent – entry into aged care.
Importantly for the aged care and health sectors, research helps inform industry and government that residents in retirement communities also have reduced interactions with GPs and hospitals.
All up, this results in significant efficiencies for governments to the tune of almost $3.5 billion per annum.
In years gone by, this industry was focused on real estate – but today it is focused on health, wellbeing and care.
As such, it is critical that Governments understand these opportunities as they plan for the significant increase of older Australians and aim to keep the aged care sector operational.
Legislative landscape
There are currently five legislative reviews into the sector, extending from Western Australia, South Australia, Tasmania, Victoria and Queensland.
Many of the high-level key elements across these jurisdictions are consistent.
Fundamentally, industry is motivated by a desire to increase consumer and investor confidence, raise industry standards, and pursue better regulation, while at the same time delivering important housing supply into a market currently under duress.
This is our starting point in any conversation about legislation.
In WA, SA, Queensland and Victoria, parliaments are assessing merits and pitfalls in 12-month statutory buybacks.
This is a legal mechanism where an operator is required to buy back a resident’s unit when certain conditions are met, such as when the resident leaves, transitions to residential aged care, or sadly passes away.
Importantly, the framework for statutory buybacks is key, and can be the difference between an operator remaining commercially viable or not.
This underpins industry’s advocacy for 12-month mechanisms that accommodate an ‘all weather’ approach, including variables like congested supply chains, labour shortages, materials cost escalation, agreeing valuations with families, refurbishment parameters, and the marketing and sales process.
For these reasons, the RLC promotes a 12-month mechanism to governments that builds-in additional time to allow for these important variables to ensure operators remain operational.
This approach considers consumer interests in concert with operators and investors and seeks to also balance a smaller operator’s ability to meet these regulations. This is especially important when you consider that the average time to sell a unit across the country has ballooned to 253 days.
Despite Victoria’s recent debacle around surprise new property-based taxes, the State Government is proposing a sensible reform framework with some elements restricted to prospective application rather than retrospective, like buybacks.
Across the border and during the recent South Australian review, the RLC proposed several important resident-focused improvements, including:
- Plain language pre-commitment checklists in contracts to improve clarity for prospective residents about the nature of tenure.
- Worked estimates of exit entitlements within disclosure statements over two, five and 10-year horizons.
- A more consumer centric exit entitlement model that concurrently balances ongoing operator viability.
- Improved dispute resolution processes for resident-to-resident conflict, while increasing professional standards of village staff.
Concurrently, across Bass Strait, the Tasmanian Government is reviewing its guiding legislation and is seeking to further regulate when operators of retirement communities may increase recurrent charges and impose special levies.
Industry largely supports the introduction of increased obligations to explain the reasons for recurrent charge increases as part of the annual budgeting process, which speaks to our support of increased transparency for consumers.
However, we do want to see maintenance, insurance and utilities (water, power and telecommunications) included in the exclusions for recurrent charges to ensure that services don’t diminish in these communities.
But as we have seen in Victoria and Tasmania in recent weeks, the vagaries of the political landscape can mean uncertainty for industry especially during periods of reform.
Elise Archer – who instigated Tasmania’s legislative review – has resigned as Attorney-General and is leaving Parliament.
In Victoria’s case, Danny Pearson has been elevated in Cabinet and vacates his previous responsibility for the retirement sector. In his place steps new Minister for Consumer Affairs Gabrielle Williams MP.
In the case of Elise Archer, after a short period of temporary acting responsibilities, Madeleine Ogilvie MP adds Consumer Affairs to her ministerial portfolios. This means Minister Ogilvie is now in charge of Tasmania’s legislative review.
This might sound untidy given reviews are ongoing, but it’s the reality of the Westminster system.
In both jurisdictions, we encourage government to maintain their reform momentum.
Meanwhile, the Queensland Government is reviewing the way manufactured home estates (also known as land lease communities) are regulated and are consulting on proposed reforms like buybacks and rent controls.
Additionally – and following recent amendments to the Retirement Villages Act 1999 – the Queensland Department of Housing is now looking at financial reporting requirements.
In short, an unprecedented period of industry reform on a national scale.
Additional resources:
- A copy of the submission to the Tasmanian Government can be found here
- A copy of the submission to the South Australian Government can be found here
- A copy of the submission to the Victorian Government can be found here
- A copy of the submission to the Queensland Government can be found here
- Copies of all RLC and Property Council submissions can be found here.