Thursday, 05 December 2013 09:58

Select Committee on a review of the Retirement Villages Act 1987

In 2013, I was a member of the Select Committee of the South Australian Parliament undertaking a review of the Retirement Villages Act 1987.  The Act provides a balance between the rights and responsibilities of residents, retirement villages and administering authorities. 

Retirement villages have been around for a long time; the Royal Freemasons were the first providers of Australian retirement accommodation back in the 1860s. The number and size of villages has grown immensely since then with recent figures showing about 160,000 Australians living in retirement villages.  In South Australia there are 522 registered retirement villages with about 24,400 residents.

This is a huge industry and a very important one for South Australians, both for the owners of the villages and also for the people who reside in them and it needs to be a viable industry with a triple bottom line approach.  It is important that the people who live there enjoy the amenities they expect from these retirement villages.

The Select Committee received a number of submissions and residents of retirement villages raised concerns about issues such as entry fees; exit costs associated with remarketing; management fees; capital replacement funds; auditing annual surplus and deficits; and contract disclosure.

The issue of fees and charges is obviously at the forefront for all people who are considering going into a retirement village.  Entry fees, service/maintenance fees and exit fees (or departure fees/deferred management fees), are at the top of the list. Entry fees incorporate a resident's right to occupy a unit in a retirement village and typically take one of two forms: a loan or lease agreement or a freehold title.

In Australian retirement villages, a typical loan or lease agreement provides for lifetime (99 year) occupancy of a chosen villa or apartment and use of the community facilities which may be gyms, gardens or communal recreation areas, depending on the type of village and in many cases the location, whether it is beachside or more urban.

The up-front entry fee paid is usually not subject to the payment of stamp duty or GST. However, with freehold titles there are some other encumbrances in the same way that traditional residential property is handled. So, entry fees do vary, however, what is more contentious is the service or maintenance fees.

Retirement Villages are a community within a community and we should make sure that those communities are able to function as effectively and efficiently as possible for all those involved, whether they be the owners or the residents.

The objective of reviewing the Act was to result in more transparency and simplicity for prospective and current licensees as to their rights and obligations, as well as strengthening protections to residents and plainly stating the obligations for administering authorities.  

  The review aimed to discover what the issues and problems were and to make recommendations to the Government and to strike a balance between the needs of consumers and operators so that both the residents' and the owners' associations can have confidence that their sector will continue to prosper and provide a vital service for all South Australians.

The role of the Select Committee concluded with its final report which was tabled in State Parliament on Wednesday 27 November 2013 and can be found on this link –

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