SA RVRA claims operators’ “unconscionable” price gouging

South Australian Retirement Village Residents Association President, Roger Adamson, said the state's 26,000 retirement village residents were frustrated by a lack of action in cracking down on allegedly operators’ double dipping. 

“We understand they (village operators) are there to make a profit,” Roger said. “They’re a business and every business needs to make a profit. But there’s also greed – and that’s not on." 

“We are accepting normal business things, but it’s the gouging, the absolute gouging that they do in the double dipping with their fees and contracts." 

Roger said three aspects in particular concern the SA RVRA: 

• Uncapped capital contribution funds: Some outgoing residents are charged a capital fund contribution on exit at 1% or 1.5% of market value of the home per year of occupation. This money is ostensibly used to upgrade the homes. They also are charged refurbishment costs for individual items the provider deems need replacing. 
• Advertising and marketing fees on exit: Outgoing residents are asked to pay tens of thousands of dollars to cover the advertising costs to resell the home. Most providers have a long waiting list for people to join, so why is there a need to advertise? 
• Unclear definition of refurbishment costs: As well as paying a capital contribution fund, residents are also charged thousands of dollars on exit to refurbish their apartments. This can include replacing items such as benchtops, new carpets and tiles – work that residents say should be paid for out of the capital fund. 

Roger said updated legislation before state parliament corrected some issues for future residents, but offered little relief for current residents. 

“The changes provide future residents with more clarity and transparency of rules and fees that will be charged against their future exit entitlement … but they have not been prepared to protect the current residents in the same manner.” 

Retirement Living Council response

Daniel Gannon, Executive Director of the Retirement Living Council, said operators are doing great work in South Australia.

“Given the significant challenges governments are facing with ambulance ramping and hospital bed capacity, this industry is proud to provide privately funded accommodation and care that has been shown to reduce visits to GPs and hospitals, improve the health and wellbeing of residents and delay entry into taxpayer funded aged care," he said. “For operators of retirement communities, significant financial decisions have been made based on the existing financial models which are underpinned by the commercial terms of residence contracts. “Changing commercial terms through retrospective amendments to legislation would lead to significant financial and valuation problems for homes in these communities. “We understand that stronger consumer confidence leads to stronger investor confidence, which is why industry has been working with government on sensible prospective consumer focused reforms.”

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