News | Dec 9, 2024
Welcome to the second issue of the bulletin for retirement villages operators.
The Retirement Villages Amendment Act 2024 is assented to!
On 13 November 2024, the Honourable Chris Dawson AC APM, Governor of Western Australia, assented to theRetirement Villages Act Amendment Act 2024 (the Amendment Act). The Amendment Act makes significant changes to the Retirement Villages Act 1992 (the Act) which governs operation retirement villages in Western Australia.
What is next?
It is important to note that the changes to the Act will come into operation in about 12 months’ time to allow Consumer Protection to prepare regulations that will support the new provisions.
This bulletin provides an update about the development of regulations applying to capital items, modification, and termination of retirement village schemes.
1. Proposed regulations applying to management of capital items in a retirement village
Part 3B of the Act will deal with capital items in a retirement village. The Act has been amended to define a capital item as including any building or structure in a retirement village and any plant, machinery or equipment used in the administration of the retirement village. The Act also contains definitions for capital maintenance and capital replacement. These definitions will provide certainty to both operators and residents about responsibility for maintenance and replacement of capital items in a retirement village.
Consumer Protection will develop guidance materials to assist operators and residents to determine whether capital works are ‘maintenance’ or ‘replacement’. If a particular issue is regularly causing disputes, it will be possible for regulations to be made to clarify the situation.
Requirement in the Act to prepare a plan for capital maintenance and replacement
Operators of retirement villages will be required to prepare and keep up to date plans for capital maintenance and capital replacement. The regulations will specify:
- the period that the plan for capital maintenance and replacement must cover (proposed to be 5 years);
- the information that must be included in plans for capital maintenance and replacement;
- the capital items that must be included in a plan for capital maintenance and capital replacement;
- arrangements for notifying and consulting with residents on the plan; and
- that operators must review the plans in each financial year and at least 1 month before the annual general meeting with residents.
Proposed regulations will require the plan for capital maintenance and capital replacement, with any amendments, to be provided to residents with other financial and budget information before each annual general meeting.
Plans for capital maintenance and replacement assure residents that the operator is planning for the long-term upkeep of the retirement village. Such plans are a standard method to assist with ongoing management of capital items in community living schemes, and they exist in varying forms under strata titles law and retirement villages legislation in Queensland and New South Wales.
As a transitional measure, regulations are expected to require each retirement village to have a plan for capital maintenance and replacement within 3 monthsof the regulations coming into operation.
A requirement in the Act for operators to maintain a fund for capital maintenance
The Act will now require operators of retirement villages to maintain a fund for capital maintenance. The proposed regulations will require:
- the fund for capital maintenance to be held in an account with an authorised deposit-taking institution; and
- for recurrent charges or any other monies that residents are required to pay in connection with capital maintenance to be held in that fund.
Operators must not use money in the capital maintenance fund for any other purpose other than to pay for capital maintenance.
Consumer Protection understands that most operators have up to now voluntarily maintained a ‘reserve fund’ for long-term capital works. This may mean that funds for capital maintenance and capital replacement, as those terms are now defined in the Act, may currently be held in a single fund.
The regulations will make provision for transitional arrangements to enable operators to establish a capital maintenance fund in an orderly way, in accordance with the new regulations and the Act. It is proposed that the regulations will require operators to establish a capital maintenance fund within 3 monthsof the relevant provisions of the Act coming into operation.
Consumer Protection is also consulting with the sector on the proposed transitional arrangements.
2. Proposed regulations applying to modification of retirement villages
Modifications to buildings, facilities, amenities and services in retirement villages sometimes cause disputes between operators and residents. New provisions in the Act are intended to reduce these disputes by setting out a clearer framework under which modifications of retirement villages can take place.
The amended Act will broadly define modification to include:
- redevelopment of the land used for the retirement village
- construction, demolition or change of use of a building or structure (including residential premises), and
- change to services or amenities that are provided or made available to residents.
Operators will be able to make modifications to the retirement village pursuant to a modification plan approved by either a special resolution passed at the residents’ meeting or by an order of the State Administrative Tribunal (the Tribunal).
A modification plan must include information prescribed in the regulations. Proposed regulations will require this information to include:
- details about the proposed modification e.g. whether it includes demolition or construction of buildings or reduction of greenspace available in a village
- reasons for the modification, and
- specific details about changes in facilities, services and/or residential premises available in the village because of the modification.
The information to be included in the modification plan must be sufficient to ensure that residents are able to consider the impact of the proposed modification and make an informed decision about whether the proposal is in their interests.
To provide residents with enough opportunity to consider a modification plan, proposed regulations will require a special resolution to be passed 1 monthafter the residents are given the plan.
Regulations will also provide that if a special resolution to approve a modification plan has not been passed at a residents’ meeting within 3 monthsafter the plan is given to the residents, an operator can make an application to the Tribunal for approval of the plan.
The proposed regulations balance the interests of residents on changes that impact their life in a village and the interests of operators to maintain a village that is commercially viable.
3. New arrangements for termination of retirement village schemes
The Tribunal, instead of the Supreme Court, will be responsible for approving the termination of a retirement village scheme if residents are still living in the village.
An operator seeking to close a retirement village will be required to prepare a termination plan and provide each resident with this plan before the Tribunal approves a termination of a retirement village scheme.
The Tribunal will not approve termination of a retirement village scheme unless the operator:
- holds a meeting of residents, at least 1 month after giving each resident the termination plan; and
- obtains, or takes reasonable steps to assist each resident in obtaining alternative accommodation of reasonably the same standard or reasonably acceptable to the resident.
The information to be included in the termination plan will be prescribed by the regulations. This information will include:
- whether the termination is permanent or temporary;
- an indication of when the retirement village is expected to stop operations;
- reasons why the retirement village is being terminated, and
- arrangements the operator is making to communicate and consult with persons affected by the termination, including current residents and former residents who still have financial interests in the operation of the scheme.
How to engage in the consultation
Consumer Protection’s consultation paper for the proposed regulations on capital items, modification and termination of retirement villages is now available. To receive the consultation paper, email consultation@demirs.wa.gov.au.
Residents in your retirement village are encouraged to subscribe to retirement village reform updates so that they can receive information from Consumer Protection about implementation of these reforms. Please share this link with your residents.
Otherwise, general enquiries to Consumer Protection can be directed by email to consumer@demirs.wa.gov.au or by phone on 1300 30 40 54.
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