Arthur Koumoukelis and Lucinda Smith

New buyback rules and 42 day cap on general services charges for NSW retirement villages

Arthur Koumoukelis and Lucinda Smith

November 17, 2020

Aged Care Legislation Updates Retirement Villages

The Retirement Villages Amendment Bill 2020 (Bill) was passed by the NSW Parliament on 11 November 2020.

We outlined the new exit entitlement orders, aged care rule and 42 day cap on general services charges as they were introduced in the first print of the Bill here. Key amendments have since been agreed by both Houses that will become part of the amended Retirement Villages Act 1999 (NSW). These amendments are summarised below.

Exit entitlement orders

 A former resident who took advantage of the new aged care rule and had their daily accommodation payments (DAP) paid to the aged care facility by the operator, will also be able to apply for an exit entitlement order if their premises in the village have not been sold within 2 years after they entered the aged care facility.  The first print of the Bill prevented a former resident from seeking an exit entitlement order if they had used the aged care rule.

If the premises are advertised for sale before the resident permanently vacates the premises, the prescribed period (expected to be 6 months for villages in the Sydney Metropolitan Area and 12 months for villages in all other areas) will also commence 40 days after the date the premises are first advertised for sale.

Aged care rule

No amendments have been made to this rule since the first print of the Bill.

42 day cap on general services charges

The Bill now specifically says that the operator must not increase the recurrent charges payable by the residents of the village as a result of any liability that may be incurred by the operator once the liability of the former registered interest holder to pay recurrent charges stops, unless otherwise provided by the regulations.

According to the second reading speech in the Legislative Assembly, the aim of this amendment is to prevent operators from increasing the charges on those residents that remain in the village to make up for the shortfall left from those who have departed the village and are no longer paying for general services.

It is still the case that the 42 day cap on general services charges will not commence until the first financial year on or from 1 July 2021. However, from 1 January 2021 (assuming the Bill commences on that date) until 30 June 2021, a former resident who was a registered interest holder (registered leaseholder) and permanently vacated their premises, will be able to request the operator to deduct outstanding recurrent changes from the former resident’s future exit entitlement.

If you would like assistance to discuss issues raised by the Bill, please contact Arthur Koumoukelis or Lucinda Smith from our national Health, Aged Care and Retirement Villages team.

Authors

Arthur Koumoukelis | Partner | +61 2 8248 3437 | akoumoukelis@tglaw.com.au

Lucinda Smith | Partner | +61 2 9020 5748 | lsmith@tglaw.com.au

Maryna Roganova | Senior Associate | +61 2 8248 5881 | mroganova@tglaw.com.au