A new offering from a major retirement village operator could simplify the often hugely complex contractual arrangements involved in taking a place in a managed facility.
Aveo Group, which operates 76 retirement villages around Australia, has announced changes to its contracts with residents, including a cap on deferred management fees and a guaranteed buyback period for selling properties.
The terms of retirement village contracts have been the subject of much debate and criticism, with many residents not understanding the conditions of their entry.
A 2013 survey of 5,000 village residents by market researcher McCrindle Baynes showed extensive confusion, including that 19 per cent of people didn't even know they had to pay a deferred management fee at the end of their use of the property.
Aveo executive general manager of retirement, Alison Quinn, said the most significant change was the introduction of a guaranteed sale clause, under which Aveo guarantees to pay the outgoing member their exit entitlement if the company doesn't find a new resident for the unit within a set period.
For NSW and Tasmania, the period is six months, in line with state legislation, while in Queensland, Victoria and South Australia the period is 12 months.
Ms Quinn said Aveo was trying to make retirement village living simpler.
She pointed to outdated legislation that varies from state to state as the reason for the complex contracts village operators have to offer residents.
"By taking the lead in changing the way the retirement village industry operates, we believe this will be beneficial for the entire industry and could have a fundamental impact on future legislative reviews," she said.
Among other changes, Aveo has capped its Deferred Management Fee - the charge levied on occupants at the end of their tenancy - at 35 per cent of the entry price.
Some operators have charged DMFs of up to 100 per cent, according to media reports.
A spokesman for National Seniors Australia said Aveo's revised contract was an improvement on what is generally available in the industry but benefits would vary from state to state.
"It seems peculiar that they are benefiting NSW and Tasmania but the others have to wait another six months," the spokesman said.
However National Seniors welcomed any changes aimed at educating people and making retirement living contracts less complex and more transparent.
"If people don't start changing then noone is going to move into these places and the government is going to have to start regulating very heavily," said the spokesman.
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