The Queensland Government has moved to address concerns raised by resident-operated retirement villages about the financial impact of the mandatory 18 month buy-back regime introduced in 2017.
The Housing Legislation Amendment Bill 2021, passed by parliament on 14 October 2021, contains amendments to the Retirement Villages Act 1999 (RVA) which will exempt certain retirement village schemes from the compulsory buy-back regime.
It is the result of a targeted review and consultation process which began with the appointment of a review panel to consult with seven villages identified as potentially resident-operated: the Queensland Resident-Operated Retirement Village Support Service, the Queensland Retirement Village and Park Advice Service, as well as peak groups representing industry and consumers.
The amendments do not contemplate an automatic exemption for resident-operated villages. The government has instead opted to introduce a new regulation-making power enabling the responsible Minister to exempt certain villages, rather than attempt to create a legal definition of resident-operated retirement village. Giving the Minister the ability to name exempt villages by regulation, enabled the government to overcome concerns about the potential for “unintended consequences or loopholes” in attempting to craft a legal definition. Policy makers wanted to ensure that all freehold villages are caught by the buy-back regime unless the regulator identifies them as deserving of the exemption.
Which villages will be exempt?
Only those villages named in a regulation made under the new section 70D of the RVA will be exempt.
What are the requirements of the exemption?
The amendments to the RVA will begin when the Bill has been given assent by the Governor.
Exemption for individual villages will begin on the date a regulation declares that the exemption will apply.
Will the exemption apply to terminated contracts?
There are transitional provisions to take account of residence contracts terminated prior to a retirement village being declared as exempt from the buy-back regime so that:
- The requirement to pay the exit entitlement no later than 18 months after the date of termination ceases to apply as of the date of the declaration.
- If the scheme operator has already entered into a contract to purchase a resident’s freehold unit but the purchase has not been completed, the contract ends on the date of the declaration.
New section 70K confirms that an exemption will not affect the rights and obligations of the parties to any contract for the purchase of a unit under the buy-back regime if the date for completion of that purchase was a date prior to the date on which the exemption began.
What are the implications of the exemption?
From an industry perspective, the limited nature of the exemption means that it is likely to have minimal impact on the retirement village sector. However, it will be vital to the small number of retirement villages that are resident-operated.
The government’s concern about the potential for unintended consequences associated with a statutory definition of what is a resident-operated retirement village scheme indicates that this limited exemption is not the pre-cursor to any watering down of the requirements of the mandatory buy-back regime.
Please contact us if you require any assistance with the application of the buy-back regime.