The Queensland Government has released details of various proposed improvements to the Manufactured Homes (Residential Parks) Act 2003 (Act) to address consumer concerns about site rent and unsold manufactured homes for consultation.
This follows the release of an Issues Paper in 2022 that outlined the various consumer concerns that had been raised (discussed in our previous Alert) and invited home owners and park owners to complete a survey and make submissions.
The Queensland Government reports that 2,201 survey responses and 52 submissions were received from home owners, park owners and other interested parties. In April 2023, a summary of the data received from the survey responses was released.
As to whether this data is representative of the residential park industry in Queensland, we note that the Queensland Government’s online record of residential parks states that as at April 2023, there are approximately 23,944 manufactured homes sites in residential parks across Queensland, and in our experience, one to two persons generally occupy each site.
The proposed improvements to the Act are discussed in a very detailed Consultation Regulatory Impact Statement (C-RIS), which is published here along with a summary.
The C-RIS identifies that the key problems with site rent and unsold manufactured homes stem from:
- consumers having difficulty making informed choices when entering a residential park;
- complexities and inefficiencies with the assignment process;
- fairness and equity issues associated with site rent increases;
- imbalances in market power, consumer knowledge and expertise;
- limited incentives for park owners to sell pre-owned manufactured homes; and
- manufactured home owners being unable to easily exit a residential park when conditions change.
To address the problems and their associated causes, the C-RIS proposes various possible improvements to the Act as follows:
- Option 1 – Maintain the status quo and make no changes.
- Option 2 – Require residential parks to publish a comparison document on a website for the residential park, which will include key information to help prospective home owners compare parks.
- Option 3 – Simplify the sales and assignment process by requiring all purchasers of a manufactured home to enter into a new site agreement with the park owner with updated terms and information, but with purchasers of a pre-owned home being given an option to adopt prescribed terms of the previous site agreement (such as site rent amount, and site rent increase basis).
- Option 4 – Limit site rent increases for future site agreements to a prescribed basis only.
- Option 5 – Improve the market rent review process by establishing a specialist valuer qualification for residential park rent determination processes; and by park owners and home owners jointly appointing a valuer.
- Option 6 – Prohibit market rent reviews in existing and future site agreements. For existing site agreements with a market review clause, site rent may be increased using any second basis provided for in the site agreement or by the CPI where no other basis exists.
- Option 7 – Limit site rent increases to the higher of CPI or a fixed percentage prescribed by regulation.
- Option 8 – Limit site rent increases to CPI only.
- Option 9 – Require expense-based calculations to justify increases above CPI.
- Option 10 – Require park owners to develop and maintain a plan outlining anticipated maintenance costs and costs for replacement of capital items in the residential park, and set aside money from site rent in a trust account to meet these obligations in accordance with the plan.
- Option 11 – Establish a limited buyback and site rent reduction scheme for unsold manufactured homes. Home owners can opt in to the scheme if:
- the manufactured home was sold new on site by the park owner (or previous park owner); or if the home was originally moved into the park, the park owner has at one time sold the home on site under a selling authority; and
- the park owner has had a selling authority and has tried to sell the home for at least 6 months.
Where a home owner opts in to the buyback scheme:
- a sale price must be agreed for the home;
- the home owner must vacate the home and continue to pay site rent, but at a 25% discount; and
- where the manufactured home is unsold for 12 months after the date the home owner opts in, the park owner must buy the manufactured home.
At this stage, subject to the consultation process, the Government considers that the following package of reforms will deliver the greatest net benefit to the community:
- Option 2 – require residential parks to publish a comparison document;
- Option 3 – simplify the sales and assignment process;
- Option 4 – limit site rent increases to a prescribed basis;
- Option 6 – prohibit market rent reviews;
- Option 7 – limit site rent increases to the higher of CPI or a fixed percentage (for example, 3.5%);
- Option 10 – require maintenance and capital replacement plans; and
- Option 11 – establish a limited buyback and site rent reduction scheme.
The C-RIS proposes radical changes to the way in which site agreements and the residential park industry in Queensland operates that may significantly impact how each park owner operates their business. It is therefore important for park owners to have their say about these proposed changes.
Park owners have until 26 June 2023 to make a submission in relation to the C-RIS, which can be lodged by email to [email protected] or by post to:
Manufactured Homes Review
Housing and Homelessness Services
Department of Communities, Housing and Digital Economy
PO Box 690
Brisbane QLD 4001
Park owners should make contact with their relevant industry association/s to provide comments to assist with their submissions, or should otherwise make their own submission based on how the proposed amendments will impact their business.
Should you have any questions, please contact HopgoodGanim Lawyers’ Special Counsel, Anthony Pitt, of our Manufactured Homes team.