Queensland Parliament introduces the Housing Legislation (Building Better Futures) Amendment Bill 2017 - changes for the better or unintended consequences?

Yesterday, Housing Minister Mick de Brenni introduced the Housing Legislation (Building Better Futures) Amendment Bill 2017 (Bill) which amongst other things, contains significant amendments to both the Manufactured Homes (Residential Parks) Act 2003 (Qld) (MHRP Act) and the Retirement Villages Act 1999 (Qld) (RV Act). 

In introducing the Bill, Minister de Brenni informed Parliament that:

“The bill will also amend the Retirement Villages Act 1999 and the Manufactured Homes (Residential Parks) Act 2003 to increase transparency, improve pre-contractual disclosure processes and introduce new behaviour standards to make it easier to address undesirable behaviour in residential parks and retirement villages. A greater focus on dispute resolution is also included to provide the opportunity for issues to be resolved without having to go into the formal tribunal system.

Reforms to Manufactured Homes (Residential Parks) Act 2003 also include limitations on rental increases, prohibiting additional fees around utilities and meter readings and ensuring emergency services and health workers have access to residential parks. Other proposed amendments to the Retirement Villages Act 1999 will increase transparency in the relationships between operators and residents, and provide greater security to residents, balanced against ongoing industry viability. Greater financial transparency will be required about retirement village funds, budgets and financial statements, and will address resident and consumer advocate concerns about fees and contracts. Residents will also have greater protections around resales and exit entitlements or when there is a change in village operations. A regulation may also impose a requirement about the provision of equipment in a retirement village for public safety.”

Some of the key categories of amendments proposed in Part 4 of the Bill to the MHRP Act relevant to park owners are as follows:

• In place of the Form 1 Home Owners Information Document, a new two-stage disclosure process for entry into site agreements. 
  • The first stage of disclosure is to be given at least 21 days before entering into the site agreement.  However, this can be reduced to 14 days if the proposed home owner waives that right and has obtained independent legal advice. 
  • The second stage of disclosure is to be given at least 14 days before entering into the site agreement.   
  • If these requirements have not been complied with, then a cooling-off period of 28 days applies. In any event, even if the disclosure requirements are complied with, a cooling-off period of 7 days will apply.  In each case, the cooling off period is after the date that the last person signed the site agreement. 
  • Similar increased disclosure is to be given in relation to assignments, and the same cooling off periods apply after the date that the park owner consents to the assignment. 
• New regime for Section 69 increases. 
  • Prohibition on:
    • a park owner working out an increase in site rent using more than one “basis” at a time (e.g. the site rent cannot increase by the CPI and a market review at the same time);
    • more than one increase per year.
  • A park owner must nominate a general increase day when site rents for all eligible sites in the park will be increased on the same basis, with the next general increase day being at least 1 year afterwards. 
  • For a market review, the park owner must arrange for a valuer to first consult with the home owners committee for preparing a written valuation of the market rent, and must ensure that the valuation prepared is enclosed with the site rent increase notification given to home owners. 
  • The Tribunal is now empowered to appoint an independent valuer if certain criteria are met, and if so, the costs of that valuer are to be paid by the park owner. 
• New regime for Section 71 increases.  The same categories of special costs remain, but the provision’s applicability has been substantially restricted:
  • For an increase on the basis of a repair cost or an upgrade cost, the notice must state the period for which the proposed increased site rent will be payable to cover that cost. 
  • For an increase on the basis of an upgrade cost, if 75% of the home owners notified agree in writing to the increase, the balance home owners are deemed to have agreed to it as well.
  • The Tribunal is only empowered to confirm or reduce the proposed increase if it is satisfied that:
    • the proposed increase has not been included wholly or partly in an increase of site rent before;
    • for a proposed increase to cover an operational cost or a repair cost, that if the site rent is not increased as proposed, the residential park will not be commercially viable without significantly reducing the park owner’s capacity to carry out the park owner’s responsibilities under section 17; also
    • for a proposed increase to cover a repair cost, the park owner could not reasonably have obtained insurance to cover the cost.
• Park owners must prepare an emergency plan (with respect to emergency procedures, testing of those procedures, and information training and instruction to home owners), as well as maintain the plan and implement it in an emergency. 
• Park owners are prohibited from restricting visitors to home owners who are providing a health or community service.  Further, park owners are prohibited from restricting a visitor from visiting a home owner or other resident unless the park owner has a reasonable excuse (e.g., if the visitor interferes with the reasonable peace, comfort or privacy of another home owner). 
• Section 99A now goes further to prohibit a park owner from charging a home owner administrative or meter reading fees for the supply of utilities to a site even if the amount is charged by or for the entity supplying the utility or another entity. 
• New behavioural obligations for park owners and home owners; including a requirement for park owners to provide, within 21 days, a “complete response” to any correspondence about a complaint, proposal or question about the operation of the park received from a home owner or other resident, or a representative of a home owner or other resident. 
• Dispute resolution. 
  • Firstly, the categories of “residential park dispute” (formerly “site agreement dispute”) have been broadened, and now also include:
    • the ability of a home owners committee to bring a dispute against the park owner about a matter relating to the day-to-day running or operation of a residential park (including a failure to communicate or cooperate in dealing with the matter); and
    • the ability of a home owner to bring a dispute against another home owner about a home owner’s rights or obligations under the MHRP Act. 
  • Secondly, residential park disputes are to proceed by way of a three step process – negotiation between the parties, mediation before a mediator appointed by the Principal Registrar of QCAT, and then an application to the Tribunal. 

Further, Part 7 of the Bill sets out the proposed amendments to the RV Act.  The key changes for scheme operators are:

• Mandatory buy back if the accommodation unit has not sold within 18 months from termination of the residence contract.
• Regulation about the form and content of residence contracts, with the requirement that scheme operators use the approved form residence contract (when available).
• A 21 day pre-contractual disclosure period, which may be waived by the resident provided the resident has received legal advice. The existing 14 day cooling-off period following signing of the residence contract continues to apply.
• Replacement of Public Information Documents (PIDs) with:
  • a “village comparison document” which will be registered and must be available on the scheme operator’s website for  the village and provided with all promotional material (with a few exceptions);
  • a “prospective costs document” which contains a summary of the estimated costs of moving into, living in and leaving the retirement village and must be in the approved form; and
  • a condition report for the accommodation unit, with a process on entry and exit similar to that under the Residential Tenancies and Rooming Accommodation Act.
• Separation of the general services charges fund and the maintenance reserve fund, with distinct obligations in respect of each fund.  Separate accounts will be required for each fund, as well as an account for the capital replacement fund.
• A distinction between “reinstatement work” (that the resident is responsible for) and “renovation work” (that the scheme operator is responsible for) including regulation as to timing for works. 
• If an accommodation unit has not sold within 3 months of the termination date, a requirement to reconsider or obtain a new valuation of the resale value every 3 months (reduced from the current 6 month timeframe).  The amount determined by the valuer is not the new agreed resale value if it is less than the previous agreed resale value (a ratchet type provision).
• Redevelopment of a retirement village will be regulated and will require the scheme operator to comply with an approved redevelopment plan. The definition of “redevelopment” is extraordinarily broad and includes the expansion or reduction of the size or area of a retirement village.
• New mechanics for the winding down or closure of a retirement village, which must be in accordance with an approved closure plan.
• New requirements if a scheme operator proposes to transfer control of a retirement village scheme’s operation to another scheme operator. The transfer must be in accordance with a transition plan which has been approved by the Chief Executive.
• Broader powers for the Chief Executive to appoint a manager of a retirement village if certain provisions of the Act are not complied with (including if a closure plan or transition plan is not complied with).
• Enforceable behavioural standards for scheme operators and residents.

The Bill also proposes to regulate the role of valuers in determining the resale value of a right to reside.  

The Bill has been referred to the Public Works and Utilities Committee, which is to report back to Parliament about the Bill by 28 September 2017. We are awaiting confirmation as to the actions the Committee proposes to take, and the date by which any submissions are to be received. Nevertheless, it is anticipated that this process will move quickly as the Government has indicated its intentions to have the Bill passed later this year.  

For more information or discussion, please contact Partner Anthony Pitt.