Significant changes are set to take effect from 1 September 2025 affecting Retirement Village operators in New South Wales. As the existing regulations expire on 31 August 2025, a new regulation will commence.
As this stage, the Retirement Village Regulation 2025 (Proposed) gives us an insight into what the new regulations may look like. However, the proposed regulation is still open to submissions and modification before they are passed.
The key changes introduced by the proposed regulation will affect disclosure, meetings, financial management and conduct rules.
Changes in the Proposed Regulation
1. Part 2 Representations and information about retirement villages (sections 10-14)
Section 13 of the proposed Regulation stipulates the documents that must be made available to residents and prospective residents. Section 13(i) clarifies that the detailed list of all available premises provided by operators must include the listed price of the premises, the size of the premises and the number of bedrooms.
2. Part 4 Meetings (sections 21-23)
Under section 21 of the proposed Regulation, operators must discuss information regarding the future plans for the village, the management of the village and safety issues at the annual management meeting.
3. Part 5 Financial Management (sections 24-42)
(a) Section 34 of the proposed Regulation replicates clause 26AA of the current Regulation and provides further clarity regarding its operation in villages where there are residents who own their units or lease them for at least 50 years and are entitled to at least 50% of the capital gain (registered interest holders). Operators can only increase a resident’s recurrent charges to cover a shortfall caused by a former occupant (who is a registered interest holder, has vacated the premises and is no longer paying recurrent charges) if:
(i) the increase occurs as part of the approved annual budget for the financial year immediately following the financial year in which the former occupant’s liability to pay recurrent charges ended;
(ii) the former occupant’s liability ended after 1 January 2021; and
(iii) the approved annual budget sets out how the increase was calculated and the total number of former occupants whose liability ended in the preceding financial year.
Asset Management Plan (AMP) changes
(b) The proposed Regulation will amend the AMP requirements:
(i) Section 36(2) of the proposed Regulation will replace clause 26F(2) of the current Regulation and reduces the list of what is to be recorded in the asset register for each major item of capital and shared major item of capital.
(ii) Operators will still be required to record a brief description of each major item of capital, the asset ID number and the name of the retirement village or aged care facility using shared major items of capital and the ‘remaining effective life’ of items instead of their ‘effective life’ which may be estimated by using current tax ruling standards. They will also have a longer period to update the register after any new purchase of an item (21 days instead of 7 days).
(iii) However, operators will no longer have to record:
- (A) the serial number of the item;
- (B) the brand and model of the item;
- (C) for an item that is not a building, structure or part of the infrastructure of the residential village – the date of purchase and the purchase price;
- (D) if the item is a building, structure or part of the infrastructure of the residential village – the purchase price, the date on which construction of the building, structure or part of the infrastructure was completed and the costs of construction; or
- (E) accumulated costs of maintenance.
(c) Regulation 26D of the current Regulations stipulates in formation to be included in an AMP including Secretary’s guidelines under section 189B of the Act, which are otherwise non-binding. The Proposed Regulations will remove the Secretary’s guidelines from the AMP so that they are not binding in any context.
(d) Operators will be required to provide an annual capital maintenance report to residents under the proposed Regulation instead of a 3-year report.
4. Part 8 Relevant village information (section 54-56)
Section 58 of the proposed Regulation allows NSW Fair Trading to exchange relevant information with the Ageing and Disability Commission (ADC), such as compliance information and resource allocation.
5. Schedule 5 Relevant Village Information
The proposed regulation amends the disclosure requirements in the following ways:
(a) Operators will no longer have to provide information about any convictions under the Act, the details of the entity that owns the land on which the village is located, where the operator is not the owner or the name and contact information of a village’s Residents Committee.
(b) However, the operator’s ABN, ACN or ARBN must be disclosed for all entity types and if the operator is in a partnership, the full name of all partners must be disclosed.
6. Schedule 8 Penalty Notice Offences
Schedule 7 of the proposed Regulation introduces three new rules of conduct:
(a) Section 8 – operators must develop a strategy for preventing elder abuse.
(b) Section 18 – operators must keep records of conflicts of interest.
(c) Section 20 – operators must not discourage residents from making complaints or pursuing internal disputes.
The breach of these rules by an operator is proposed to be an offence, attracting a penalty of $2,200.
7. Drafting Changes
As always there are also drafting changes that will have little impact on operations. These include technical changes to the definition of optional services, the source of the Tribunal’s powers, and the publication of prescribed forms of General Inquiry Document, Disclosure Statement, Termination Notices and Proxy Forms.
8. Next Steps
As the period for public submissions closes at 5pm on 12 March, a further draft of the Regulations should be released once the submissions have been considered. We anticipate that the further draft will also address holding deposits, voting procedures and much needed improvements to dispute resolution processes. Stay tuned for our next update including impact assessment on the further draft.
How we can help?
If you require further information or would like to discuss how these significant changes might affect you, please contact , Nicola Arvidson or another member from our team.
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Disclaimer
The information contained in this Alert is intended as general commentary only and should not be regarded as legal advice. Should you require specific advice on the topics discussed, please contact the firm directly.