Retirement village reform: round 2

Shonky retirement villages, so the NSW Government claims, will be forced to clean up their act as the Government moves to implement a number of reforms.

The reforms include a mandatory Code of Conduct, measures to make contract terms and exit fees simple to understand and an improved dispute resolution process.

The NSW Government will also appoint a dedicated Retirement Village Ambassador to advocate on behalf of residents and report back on key issues.

The reforms are based on the recommendations of the inquiry into the retirement village sector in NSW, which was ordered after reports about alleged misconduct in the sector.

The report found that 63 per cent of people did not believe that retirement villages conducted marketing activities honestly or fairly. It also found that 59 per cent of people thought that exit fees were difficult to understand.

The reforms could be a win for the 55,000 residents living in NSW retirement villages and the many more who are set to move into retirement villages as the population ages.

A word of caution is in order though.

The NSW Government has claimed to have cleaned up the retirement village industry in NSW once before. On 1 October 2013, it brought in standard contracts for the five most common village types.

While standard contracts may have improved things, the fact that less than five years later a further inquiry recommends further reforms suggests that standard contracts have not cleaned up the industry. It remains to be seen if the new reforms will improve things.

If you want to buy into a retirement village, don't assume that the village operator is a fine and upstanding entrepreneur.