Upcoming changes to the Retirement Villages Act 1986 (Vic)

New laws relating to retirement villages in Victoria were passed on 28 May 2025, and are due to take effect from 1 May 2026. 

A review has been conducted of the Retirement Villages Act 1986 (Vic) (Retirement Villages Act) based on community feedback that the current legislation does not provide adequate protection for retirement village residents.  The new laws offer greater safeguards and regulation of many aspects of retirement villages and residence contracts for retirement villages.  The changes are extensive, however we have detailed below some of the significant changes.

Introduction of standard contracts

Currently, retirement village contracts are often very complex documents and are difficult for prospective residents to understand, particularly in relation to the costs and ongoing fees payable by the residents. As contracts can vary greatly between retirement villages, it is difficult for residents to compare contracts and obligations.  To resolve this, many required contract terms will now be included in the amended Retirement Villages Act.  A standard form contract is to be introduced (by Regulations yet to be made) with the intention to make it easier for prospective residents to understand and compare rights and obligations between retirement villages.

Cooling-off period extended

Residents will benefit from a longer cooling-off period of 7 business days (rather than 3) for both owner and non-owner (leasehold) residents.

New Information Statements

A new information statement is to be provided to prospective residents in a form approved by the Director of Consumer Affairs Victoria, instead of the current fact sheet and disclosure statement.  The information statement will set out prescribed information about the retirement village and the ongoing financial obligations of the resident if they enter into a residence contract.  The information statement must be published on the village operator’s website and also must be provided to prospective residents.  There will also be a requirement to update the information statement annually.

Condition reports

Village operators will need to provide non-owner residents with a condition report in a prescribed form before a resident moves in as evidence of the property’s state of repair.

Regulation of entry payments

New rules will apply for payment of entry payments, including payment to an agent or special purpose account. The funds are then to be held until the resident’s right to occupy the residence is unconditional, the resident has immediate right to entry, an occupancy permit for the residence has been issued and any outgoing resident is paid their exit entitlement.

Deferred management fee

A deferred management fee will only be calculable on the entry payment paid by the resident and by the length of time a resident lives in the village to the date the resident vacates the village.  Currently, deferred management fees are usually charged on the market value at the time the next resident take occupation of the residence.  If a resident transfers to another residence in the same village, the village operator cannot charge another deferred management fee.

Capital gains and losses

A resident will be entitled to share any capital gain and capital loss with the owner, but only in the same proportion.  Currently, residence contracts often provide that a resident bears 100% of a capital loss but would only be entitled to, say, 50% of a capital gain.

Settling in period

Residents could be entitled to a settling in period, if determined by the residence contract.  A deferred management fee cannot be charged if the resident leaves the village within a settling in period.

Repayment on exit

Village operators must repay a resident’s exit entitlement, at the latest, 12 months after the day the resident permanently vacates the residence.  Currently, there is an ability for village operators to delay repayment for significant periods, potentially years, provided they comply with certain conditions.

Maintenance charges

Village operators will not be able to charge maintenance charges and other optional charges after the resident provides vacant possession or the date of death of a resident (if earlier than vacant possession).

Annual financial contract checks

Village operators will be required to provide residents with an annual financial check of their contracts.  The form of this contract check is not yet known and will be in a form approved by the Director of Consumer Affairs Victoria.

New dispute resolution procedures

Improved dispute resolution procedures expand on the existing internal procedures.  In addition, parties will also be able to apply to the Department of Government Services to undergo conciliation under a new scheme to be set up within that Department, encouraging the resolution of disputes without unnecessary expenditure or stress.

Increased regulatory powers

Should a matter escalate, parties will be able to apply to the Victorian Civil and Administrative Tribunal (VCAT) whose powers are extended to make orders regarding residence contracts.  VCAT will have powers under the Retirement Villages Act to hear such disputes.

Village operator’s termination rights restricted

The termination rights of village operators under residence contracts will be further regulated. This will include a requirement for termination of a residence contract on health and safety reasons so that (in addition to notice requirements) termination can only occur if the resident would pose a substantial risk to the health and safety of any person, including the resident, if the resident were to remain in the retirement village and the village operator obtains VCAT approval for the termination.

Maintenance of village operators

Village operators will now have obligations to maintain buildings, structures and plant and equipment in the retirement village unless such items are owned by the resident.  Village operators will be responsible for funding any capital replacements if not covered by the maintenance charges or a maintenance fund established for the village.

Repair and renovations by residents

For non-owner residents, reinstatement obligations of a resident when exiting the residence will be limited to ensuring their residence is reasonably clean and reinstated to their condition on entry, excluding fair wear and tear, unless agreed otherwise by the resident and owner in the residence contract  If further renovations are agreed, the cost of renovation is to be shared by the resident and operator in the same proportion as the share of the capital gain and loss.

Village operators will not be able to unreasonably withhold consent to resident alterations and modifications to their residence.

For owner residents, provisions in residence contracts which provide for alteration or reinstatement of the residence will be prohibited.

Village emergency plan

Village operators will be required to create a village emergency plan and undertake an annual village safety inspection.

Village operating deficits

Any village operating fund deficits for a financial year will be required to be made good by the village operator and any surplus be required to be carried forward to the next year.

Changes to village services

If a village operator wishes to vary village services or facilities (including the provision of a new service or facility), a special resolution of the residents will be required.

Pets

Village operators will now be able to unreasonably refuse for residents to have pets.

Code of Practice

The changes to the Retirement Villages Act include provision for a new mandatory code of practice to be created by regulations.  Details of this code of practice are to be confirmed.

Further details of the changes will become clearer once regulations are made under the Retirement Villages Act and Consumer Affairs Victoria publishes approved documents.

If you have any questions or require advice in relation to the changes or in relation to retirement villages, please contact:

Vittoria De Stefano
Principal
M 0407 091 301 | T 03 5226 8520
E vdestefano@ha.legal

Emma Buchanan
Special Counsel
M 0498 563 248 | T 03 5226 8529
E ebuchanan@ha.legal

Colette Chrzanowski
Senior Associate
M 0429 019 865 | T 03 5226 8521
E cchrzanowski@ha.legal