As a result of major concerns I undertook an extensive review of this issue in late 2006 at my cost for no personal gain. No one was particularly interested. Below is a broad summary of my findings:
• All the elements of a combined property development and retirement village transaction are complex and based on legislation which appears to provide a loophole for developers to exploit.
• The risks in such transactions are significant. The law provides an inadequate level of regulation and disclosure on privately owned companies to protect the interests of people who are involved in the decision making process approving these villages and more particularly protecting the financial interests of people who genuinely wish to reside in them.
• In drawing comparisons with the financial services and property sectors, the Act, Regulation and Policy provides an inadequate level of consumer protection for those investing in retirement villages compared to protection required by other financial and property contracts governed by Commonwealth and NSW State legislation.
• The level of regulation, standards of governance, disclosure and financial protection provided to investors in retirement villages through the Act and Regulation are weak.
• The financial structure of retirement village investments is heavily weighted in favour of the developer or village operator and the potential for loss of investor capital is significant when compared to other residential property investments.
• The requirement for effective and affordable retirement living is an accepted requirement in our society, but existing government legislation, regulation and policy fails to meet the needs of people in this position. Risks to investors are not acceptably managed and controlled.
I am delighted that someone like Alan Kohler is now picking up the cause for the thousands of people who are being “ripped-off” by unscrupulous behaviours and major loopholes in current legislation.