Retirement villages will be forced to pay exit entitlements within 12 months after a resident leaves under the state government’s proposed amendments to laws regulating retirement villages.
The state government has recommended broad reforms to the Retirement Villages Act 1992 in Western Australia after a lengthy consultation period.
The changes attempts to address the issues surrounding exit entitlements, which have proved a point of tension between retirement living providers and departing residents and their families.
At present, the retirement living provider usually pays a person’s exit entitlement once the dwelling has a new occupant.
However, if the market is slow, it can be difficult for operators to sell properties, delaying the exit entitlement payment to residents.
According to Consumer Protection, this can leave residents waiting for long periods to receive their money, with the lack of funds reducing their accommodation options for several years.
Under the proposed legislation, retirement living providers will have 12 months to pay back the exit entitlement to the resident.
It said operators would be provided with a 12 month transition period to prepare for new exit entitlement requirements.
Other changes include operators being required to clearly describe their product; providing contracts to prospective residents earlier; and the establishment of a database managed by Consumer Protection to provide information on retirement villages.
The state government said further consultation with key stakeholders would occur before the legislation was introduced to parliament.
Commerce Minister Roger Cook said the issue of exit entitlements was contentious, but he hoped the government had got the balance between requirements of residents and providers right.
“We understand the stress that former retirement village residents have experienced by waiting for their exit entitlements for an extended period, especially when the payments are urgently needed to fund alternative independent living or aged care," Mr Cook said.
“We hope these proposed changes will avoid those unfortunate situations.
"We also hope that introducing time-limits gives residents greater certainty and confidence in buying into a retirement village, that they know they will be able to access their exit entitlements within a reasonable timeframe.
"It's important that the industry remains financially viable. We believe that we have got the balance right by including a transition period."
Property Council of Australia WA Division executive director Sandra Brewer said the proposed changes to exit entitlement policy, which would apply retrospectively, represented a major government intervention in private contracts.
“Whilst elements of the reforms are unfavourable, Industry is hopeful that the conclusion of the reform program, which has been highly disruptive for over a decade, will now allow the retirement village sector to do what it does best and provide outstanding age-friendly independent accommodation options for older Western Australians,” Ms Brewer said.
