Village operators in NSW have been required to include the Average Resident Comparison Figure (ARCF) in all disclosure statements issued to prospective retirement village residents since 1 March 2018. The ARCF is an indicative figure intended to help prospective residents understand and compare the financial cost of living in different villages. Each year the method of calculation changes in line with changes in the index relevant to the resident’s premises as published by the Australian Bureau of Statistics (ABS).
The latest ABS data for the March 2022 quarter has recently been published. As a result, calculations of the ARCF need to be updated to include the latest average annual growth percentage in property value, as applicable to each village. This index depends on the location of the village (Sydney or the rest of NSW) and the types of dwelling (established house or attached dwelling). The updated percentages are as follows:
- Median Price of Established House Transfers (unstratified); Sydney index – 7.71%
- Median Price of Established House Transfers (unstratified); Rest of NSW index – 9.27%
- Median Price of Attached Dwelling Transfers (unstratified); Sydney index – 4.54%
- Median Price of Attached Dwelling Transfers (unstratified); Rest of NSW index – 9.00%
If you are already using our tools to calculate the ARCF for your village, please ensure you update the spreadsheet formula to include the new applicable percentage.
The ARCF is calculated as the monthly average of the sum of the following amounts over a period of 7 years:
- The total recurrent charges payable under the village contract;
- The departure fee payable by the resident if the premises are vacated at the end of that period; and
- Capital gains, if any, payable to the operator by the resident at the end of that period.
For the purposes of calculating the capital gains, the ARCF uses the resident’s entry payment varied in accordance with the average annual change in the March quarterly variation for the preceding 10 years of the relevant ABS index.
If you would like assistance to understand or update your disclosure statements, or would like a customised tool to make calculating the ARCF easier for your sales team, please contact our national Health, Aged Care and Retirement Village team.
Leanne Truong | Lawyer | +61 2 8248 3454 | email@example.com