Victorian Retirement Village Residents Exposed to Financial Exploitation

The Victorian State Labor Government began reviewing the Retirement Villages Act in 2017, after some 9 years they failed to fix one of the most serious of problems.

How the statement by Consumer Affairs Victoria leads to Victorian retirement village residents being exposed to financial exploitation by paying a maintenance charge greater than they have a statutory obligation to pay.

The statement by Consumer Affairs Victoria is from page 13 of their booklet A Guide to Living in a Retirement Village. It is contended that the statement misleads the entire Victorian industry when it comes to the methodology used to calculate the $ value of the maintenance charge. Whilst the statement may have been purposely simplistic given the nature of the publication, it has been adopted and practised by village operators statewide as law.

The misleading statement -

“The retirement village can only increase your maintenance charge in line with the annual Consumer Price Index (CPI) adjustment.

A bigger increase is only allowed if it is approved by a resolution of the residents’ committee or a resolution of a majority of the residents.”

The statement guarantees the payment of a ‘maintenance charge’ at a $ value greater than village residents have an obligation to pay under the act. It deprives residents of the statutory protections afforded them under Sections 38.1, 38AA, 38.2, and 38.4 of the Retirement Villages Act.

The page 13 CAV statement incorrectly prescribes that the primary question to be asked in each and every year of village operation is – is the increase in the maintenance charge to be greater than a cpi increase. Residents are afforded protection under Section 38.2 which mandates the primary question each year is - is the $ value of the proposed maintenance charge to be greater than the Section 38AA cpi index % increased adjusted maintenance charge.

The ‘adjusted maintenance charge’ is not the previous maintenance charge adjusted for cpi. The confusingly named adjusted maintenance charge is a Section 38AA cpi calculated, standalone, $ value. A value to which the proposed maintenance charge is compared (benchmarked) for the purposes of affording residents protection under Section 38.2 each year.

The page 13 statement incorrectly prescribes that a Section 38.4 vote of residents is only required in those village years where the increase in the maintenance charge is greater than a cpi increase. Section 38.4 mandates a vote of residents in each and every village year where the $ value of the maintenance charge is to be greater than the Section 38AA cpi calculated adjusted maintenance charge.

Table A and then Table B below establish that for a village of 90 units, with a maintenance charge in the first full year of $624.00 per month, residents are misled into paying $357,062.62 more in their maintenance charge than obligated to pay under the RV Act. Using the Consumer Affairs methodology in Table A - 

1. The operator sought and was granted authority by unsuspecting residents in years 2 and 6 under the invalid CAV methodology of - the increase in the maintenance charge was greater than a cpi increase.

2.The operator contended that resident authority was not required in years 3,4,5, 7 & 8 under the invalid CAV methodology of – the increase in the maintenance charge was not greater than a cpi increase.

                                                                              Table A

Under the methodology espoused by Consumer Affairs Victoria, the operator failed to calculate a $ value for the statutory ‘adjusted maintenance charge’ despite having an annual obligation to do so under Section 38AA of the RV Act.

Table B below uses the provisions of Section 38.1, Section 38AA, Section 38.2 and Section 38.4 of the Victorian Retirement Villages Act to calculate the maintenance charge. The outcome over years 3.4.5.7.& 8 of village operation is a payment by residents of $357,062.62 in their maintenance charge above their statutory obligation to pay.

                                                                             Table B

 
Table B above calculates the $ value of the maintenance charge using the statutory provisions of Section 38.1, Section 38AA, Section 38.2 and Section 38.4
of the Victorian Retirement Villages Act.

The fee overpayment stems from -

1. The village operator in calculating the maintenance charge used the invalid methodology espoused by CAV in Page 13 of their booklet A Guide to Living in a Retirement Village. The actions of the village operator breached the provisions of Section 38.1, Section 38AA, Section 38.2 and Section 38.4 of the RV Act.

2. The operator failed to calculate in each and every village year (excl 1st) a $ value for the poorly named, stand alone, Section 38AA cpi calculated adjusted maintenance charge. (One is shown in Table B to illustrate the magnitude of the financial exploitation problem)

38.1 - "adjusted maintenance charge" means the adjusted maintenance charge determined and indexed in accordance with section 38AA;

38AA(2) - For the purposes of subsection (1), the adjusted maintenance charge must be determined for each relevant financial year for the retirement village in accordance with the formula—

3. The operator failed to compare (benchmark) the value of the proposed maintenance charge to a $ value for the Section 38AA cpi calculated adjusted maintenance charge. This action denied residents the protection afforded them each year under Section 38.2 of the RV Act.

38(2) Despite anything to the contrary in a residence contract, a management contract or the bylaws a resident is not required to pay a maintenance charge to the extent to which it is greater than the adjusted maintenance charge.

4. The failure of the operator to compare (benchmark) the value of the proposed maintenance charge to a $ value for the Section 38AA cpi calculated adjusted maintenance charge also denied residents the protection afforded them under Section 38.4 of the RV Act. That in each and every year where the operator proposes a maintenance charge at a $ value greater than the Section 38AA cpi calculated adjusted maintenance charge, village residents are granted the statutory right to choose which of the two values they will pay.

38(4) Subsection (2) does not apply if the payment of a maintenance charge that is greater than the adjusted maintenance charge has been approved by resolution of a majority of the residents at a meeting of tthe residents or is approved by resolution of the residents committee.

Table B establishes that residents were misled into paying some $357,000 more in their maintenance charge than they were obligated to pay under the provisions of Section 38.1, 38AA, 38.2 and 38.4 of the Victorian Retirement Villages Act.

This example is for an industry average size village of 90 units and paying an industry average size $624 per month toward village operating costs. There are some 450 villages in Victoria, housing some 36,000 Victorian retirees, operating under the provisions of the Retirement Villages Act. A frightening $160 million dollars in unauthorised charges over the period.

Retirement Village Residents Fight Back

 Housing for the Aged Action Group posted the following details - 

Not just unfair, unlawful: VCAT rules against village charging Deferred Management Fees

Housing for the Aged Action Group welcomes a decision from VCAT President Justice Woodward which found that the Residential Tenancies Act prevented a land lease village from charging Deferred Management Fees (DMFs). DMFs are a common kind of exit fee charged across several types of retirement housing, often costing departing residents or their families tens of thousands of dollars or more.

“We have long said that these DMFs are unfair and, in some cases, unlawful,” said Shane McGrath, HAAG’s Senior Tenancy and Retirement Worker. “This decision confirms that some of the most common models for DMFs in land lease communities are prohibited under Victorian law.”

Click here for the full story - https://www.oldertenants.org.au/publications/not-just-unfair-unlawful-vcat-rules-against-village-charging-deferred-management-fees

Are Retirement Villages A Rip-Off

 The Jacinta Allan Labor government 2025 Victorian Retirement Villages Act perpetuates the rip-off of charging a purchase price without gaining ownership, only occupancy in a retirement village. VOTE NO.

Retirement Village repayment period now 12 months

 Currently Victorian retirement village residents wait 6 months for repayment of their refundable amount on leaving a village. The Jacinta Allan Labor government has pushed that out to 12. Why? Only 1 winner the operators pockets. Elderly Victorians lose, what do they live on, how do they go forward.

Retirement Villages What is Wrong

The critical importance of retirement village resident submissions to Victorian state government inquiries is that they are actually living the experience not simply 'working in the field'. They know what is wrong because they have experienced it, suffered from it.

Victorian retirement village residents find that there is almost zero protection when something goes wrong, or the system to obtain that protection is so cumbersome, so demanding on them, that surrender is ultimately the chosen option. And village operators know that and use it to their own financial advantage.

All this from a Victorian Labor government that fails to enforce the law as it is currently written, let alone to improve it to protect the very people it was originally written to protect.

"The law was clearly on the side of the village residents. It was a lack of access to affordable, quick, decisive enforcement of the law that failed them most". - Retvilldotnet

Retirement villages, the process of for-profit operators seeking financial reward from this commercial activity under the guise of the provision of benevolent housing for older Victorians. Sadly and particularly in Victoria the commercial risks to operators are dampened by statute whilst at the same time the commercial rewards are enhanced by statute. 

For Victorian retirees who make that fateful decision to enter a retirement village it is the complete opposite. The payment of the capital value of the village unit, not for ownership simply occupancy. The payment of all the costs of property ownership with none of the rewards.

"Families need to be aware that what we are talking about here is the transfer of intergenerational wealth, not to families but into the pockets of corporations. Shame about the elderly not having enough money for aged care."

So what is wrong with Victorian Retirement villages, the answer is -

1. Bureaucrats who don't really know or fully understand the product they are producing legislation for.
2. Legislators who don't really know or fully understand the product they are enacting legislation for.
3. State Governments who are far too easily seduced by slick marketing from the industry.
4. A failure of all of the three parties above to listen to the one group of people who really do know and fully understand the product, the village residents and their families. 

Village residents understand because they suffer financially from the legislative inequities produced by Bureaucrats, Legislators, State Governments.

Transfer of Intergenerational Wealth

Retirees don't deserve the financial disaster that comes from downsizing from the family home into a retirement village. @SffpVictoria @ademsomyurek @_davidlimbrick @georgievpurcell @rachelpaynemp @dettershankMP @BradBattinMP @DavidDavisMLC @NStaikos #springst @AivGoesGreen pic.twitter.com/zSxfvEk82u

— Les Scobie (@retvilldotnet) February 4, 2025

Capital Wealth Lost

Retirement village analysis shows the dominant financial model for retirement villages the loan lease model is causing a demonstrative transfer of capital from residents and their families to operator corporations. https://t.co/4zW6TvuCXF @MichaelWestBiz @consumervic #springst

— Les Scobie (@retvilldotnet) February 3, 2025

Vic Labor Tramples Retirment Village Residents

@VictorianLabor has trampled some 36,000 retirees in retirement villages by making them wait 12 months to get their money back on leaving a village. Insulting them by saying probate takes longer than six months. @NStaikos @JaclynSymes @TimMcCurdyMP @consumervic @abc730 #SpringSt pic.twitter.com/GtDQ1xOOPF

— Les Scobie (@retvilldotnet) February 2, 2025

Vote NO Retirement Villages

 VOTE NO to the new Retirement Villages Act.

The new act perpetuates the retiree rip-off by charging a 'purchase price without property ownership' to obtain entry. 

The village owner/operator is authorised by the act to transfer all the costs of property ownership to the retiree whilst retaining all the benefits for themselves.

The business model inherent within the act hides what is simply residential tenancy by any other name but a demonstrably higher price.

What is wrong with Retirement Villages

 What is wrong with Victorian loan/lease retirement villages? 

1. Property Ownership is never granted.
2. You paid for it but you don't get to own it. 
3. You only 'rent' it. 
4. This through deceptive names like 'entry payment' and 'deferred management fee' that obscure the true $ cost.
5. You pay for management of the property even though you don't own it.
6. You pay for upkeep of the property even though you don't own it.

Zero Functionality for Village Deferred Management Fee

The Jacinta Allan Government new definition of the 'Deferred Management Fee' as a fee for 'services' has ZERO functionality. 

This change is from the new proposed Victorian Retirement Villages Act.

ZERO functionality comes from the fact that village residents already pay 100% of the cost of 100% of the management services that Victorian retirement village operators claim and charge for as necessary to successfully operate the village.

Under Australian consumer law an operator cannot charge for ‘services’ where 1. there is no intent to supply or 2. no supply has in fact been made.

Competition & Consumer Act 2010
Chapter 3. 3-1 Unfair practices. Division 1. 36 - Wrongly Accepting Payment.

36-1 A person must not, in trade or commerce, accept payment or other consideration for goods or services if, at the time of the acceptance, the person intends not to supply the goods or services.

36-4 A person who, in trade or commerce, accepts payment or other consideration for goods or services must supply all the goods or services:

WHAT ARE THE NEW FEES?

HOW CAN THEY BE SUBSTANTIATED?

What is Wrong with Retirement Villages

What is wrong with retirement villages. 

Contemplating moving into a retirement village, these people have an insight and they don't have a conflict of interest.

Look Before You Leap Into Retirement Villages

When it comes to Victorian retirement villages the old adage of Look Before You Leap has never been more true. 

The new Jacinta Allan, Nick Staikos, Consumer Affairs Victoria operator centric 2025 version of the retirement villages act makes it even more imperative.

Research, research, research, the best outcome may be to not leap at all.

 

Retirement Village Residents a Frog in Boiling Water

Victorian retirement village residents are as vulnerable as a frog in boiling water, they don't know what is really happening to them.

The reality is a slow transfer of their hard earned capital wealth, not to their families, but to greedy corporations. Then they have to rely on the Australian taxpayer to fund their aged care costs.

The Victorian Labor government has just written an operator centric legislative framework to support this process.

Retirement Village Demonstrably More Expensive Than Residential Tenancy

Victorian Retirement Village residents can pay multiple times the cost of a residential tenancy for what is the same primary product, residential accommodation. Retirement villages are all smoke and mirrors hiding the true cost. 

Property ownership through retention of the family home or a true Body Corporate retirement village the only defence. 

Retirement Village Growth and Innovation in Profits

The Victorian Minister for Consumer Affairs has introduced the new Retirement Villages Act as to 'provide for future growth and innovation in the retirement villages sector'. 

Of course village residents based on their lived experience in a village see it as code for 'to provide for future growth in profits and innovation as to how that can be achieved'.

Retirement Village Fox in the Hen House by Government Decree

The new proposed Victorian Retirement Villages Act 1986 has put the Fox in the Henhouse by government decree. 

As though written by operators for operators, brushing residents aside in their insatiable pursuit of even bigger profits.

A problem with the new Victorian Retirement Villages Act

A problem with the new Victorian Retirement Villages Act.

There is a problem with the new Victorian Retirement Villages Act, the Jacinta Allan Labor government allows village operators to abuse the statutory term 'adjusted maintenance charge'. Village residents are misled into believing that the 'adjusted maintenance charge' is the 'maintenance charge' for the previous year adjusted for cpi. This is incorrect and residents are overcharged tens of thousands of invalid fees.

By statute the 'adjusted maintenance change' is the maintenance charge' in the very first year of the village, adjusted for cpi in each year thereafter. There is an easy fix just change 'adjusted maintenance charge' to 'BENCHMARK FEE'.

Allan Labor Government moves against Retirees

Sting in the tail for Victorian retirees as the Jacinta Allan Labor government moves to enhance profits of retirement village operators. 

Hollow claims of striking a balance between facilitating industry growth and innovation with retirement village resident consumer protections.

Retirement Village Residents Trapped Financially

The realisation of far to many retirement village residents and it comes too late for anything to be done about it. 

Financially trapped into the village due to the business model enforced by the Jacinta Allan Labor government legislation.