Partial win to retirees over home repayments
ONE of Australia's largest retirement village operators, Stockland, has given in to resident pressure and agreed to change the way it pays back people who leave its establishments, potentially leaving some residents up to $100,000 better off.
ONE of Australia's largest retirement village operators, Stockland, has given in to resident pressure and agreed to change the way it pays back people who leave its establishments, potentially leaving some residents up to $100,000 better off.The company, along with other village operators, has been allowed under Victorian law to withhold for eight years full payouts to people wanting to leave a village, if they bought in before this practice was outlawed from August 2006.When the previous state government banned what were known as deferred repayment contracts, the law was not made retrospective, causing tens of thousands of elderly Victorians to lose up to half of their investment if they wanted to leave or needed to raise the bond to go into a nursing home. Howard Campey, one of the resident activists who has campaigned for a better deal, said the changes had enormous significance for many village residents who felt trapped and, under the old arrangements, faced enormous losses if they left, or their estates would face if they died.Former president of the group, Residents of Retirement Village Victoria, Mr Campey and fellow activist Gerry Backhouse met Stockland residents in March to raise a series of issues angering them. In April The Age featured an article revealing how many village residents were rebelling against perceived exploitation by operators, and that the effect was stagnation in the industry. The group was notified of Stockland's change of heart last month."Since the publicity, we have noticed a complete change in the way the operators have dealt with us," Mr Campey said. "I think Stockland's changed position will put pressure on other village operators to do the same."People were telling us they were disgusted at how village residents seemed to be treated."Mr Campey said in his own case, he and his wife would be about $100,000 better off. They paid $220,000 when they bought the lease on their unit at the Burnside Village in Melbourne's west in 2004. Under the deferred repayment contract, they would have had to wait eight years for that to be repaid or accept $120,000 before.Stockland has 62 such villages around Australia. The CEO of its retirement living division, David Pitman, said the new arrangements meant anyone with a pre-August 2006 contract who left one of its villages after May 1 this year would be guaranteed to get their money back."We bought out a company called ARC [Australian Retirement Communities] in 2007 and these contracts are what we inherited," Mr Pitman said. "We have different contracts in place now and it is our policy to go beyond the minimum requirements under Victorian law."But the change has come too late for sisters Maree Kelly and Julie Dalton. Their mother bought a unit at Burnside Village in 2003 and when she died in January 2011, they were offered $131,000 by Stockland.Under the deferred repayment contract, they will have to wait until 2018 to be entitled to the full $268,000 value of the lease, as their mother died before May 1 this year.Mrs Kelly said she and her sister were seeking the entire sum from Stockland without the delay. They have taken the matter to Consumer Affairs Victoria and have sought mediation. "It's been terrible, absolutely shocking," Mrs Kelly said.Australia's biggest operator is Lend Lease Primelife, with 70 villages. Pre-2006 residents in its Victorian villages are understood to still be subject to the deferred repayments. A company spokesman was unavailable for comment.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free