According to the Australian Bureau of Statistics, in June 2020, there will be an estimated 4.2 million Australians aged 65 and over, accounting for 16% of Australia’s total population. The Australian Center of Excellence for Ageing Population Research, in a research report released in August 2022, said that by 2041, Australia’s population could reach 32 million, with the number of people aged 65 and over increasing to 6.66 million. The age of people currently eligible for the Age Pension has been updated to 67. Elderly people are an important social issue that cannot be bypassed in the future.
Utopia or Scam for the Elderly?
In Australia, there are two main ways to age in place: at home and in a nursing home. In addition, the community and hospitals provide a range of support and services for the elderly. Elderly people who can take care of themselves usually choose to age at home; while those who need to age in nursing homes are mostly disabled people, such as those suffering from Alzheimer’s disease, who can no longer take care of themselves and need 24-hour nursing home care. For those in the middle of the spectrum – those who want to live independently and receive assistance in their daily lives – a retirement village is a more suitable option.
The majority of Chinese seniors have always lived at home. Due to the cultural relationship and the fact that many Chinese families believe that the elderly can help their children to take care of the third generation at home, many Chinese elders will live with their children, and not many of them choose to live in retirement villages. As a result, the Chinese community is rarely concerned about the retirement village system. Many people do not realize that a retirement village is not a housing investment project, and buying a retirement village will not bring the same investment returns as a home ownership property in the market. On the contrary, since retirement villages can only be sold back to the management company when they are put up for sale, elderly people often realize that they have to pay a huge amount of money when they leave the village because they need to access care facilities, for example.
Retirement villages are not like traditional rental apartments, but rather, they require the elderly to purchase or rent on their own. They are living communities that provide independent living quarters, shared activity space and recreational facilities for the elderly over 55 years of age or who have retired. Elderly people living in retirement villages should be independent, safe and cared for. Today, it is very common for retired seniors to choose to live in retirement villages. In Australia, about 250,000 (7%) of seniors over the age of 65 choose to live in retirement villages. Retirement villages are generally small 2-3 storey apartments or townhouses, and seniors usually rent or buy one of the units.
Retirement villages are staffed by security personnel and caregivers on duty. In addition, like apartments, retirement villages also have gyms, tennis courts, swimming pools, and so on. Elderly people can meet a lot of like-minded people in the community to participate in activities together, and they can also invite their children to stay over occasionally. This is very convenient for the elderly to make new friends, especially those with similar lifestyle and personal interests. Of course, most retirement villages in Australia are still predominantly English-speaking, so there may be a cultural and linguistic barrier for some seniors.
From the manager’s point of view, retirement villages provide not only housing, but also the facilities, maintenance, care and social life of the entire retirement village, and to enjoy these services, of course, charges. In most of the retirement villages, the facilities and space are more than those enjoyed by the tenants living in independent houses in the same district. Therefore, it is not a fair comparison to compare the price of a retirement village unit with that of a house in the same district. However, the Government has seldom actively regulated the charges and principles of these services provided by retirement villages, thus making the fairness of this industry to the users questionable.
This utopia for the elderly has been hailed as such, but it does not stand up to investigations and revelations. It turns out that there is a serious lack of regulation in the industry, which has escaped the attention of politicians and the Aged Care Royal Commission for many years. Tim, a retired actuary, called it the peddling of a “cunningly devised scam” and Federal Member of Parliament Rebekha Sharkie called it “corporatized elder abuse”. Some elderly residents and their families have complained about the high costs of leaving, such as check-out fees and renovation costs, describing it as a financial prison, a disaster and a loss of morals.
Lurking traps in the contract
In the course of the survey, a number of residents, children, lawyers, staff, brokers and academics at the retirement village claimed that most of the residents did not understand the contents of the contract, and left the retirement village in a worse financial situation. It is important to realize that before moving in, seniors are required to sign a contract with more than a hundred pages, and if they don’t pay an attorney to read it, they have no way of knowing what they are signing. Exit fees collected by retirement villages when residents leave are an important source of revenue for the industry, and are based on a percentage of the sales price that increases each year, with upper limits varying by contract and operator. Green, an 89-year-old Village resident, bought her Village property 11 years ago for $384,000 and has received only $81,000 since leaving. Not only did she lose her life savings, but she doesn’t have enough money left over to pay for senior care. The $300,000 she lost by signing the contract was 80% of the purchase price, while the value of homes in the suburbs has doubled over the same period.
When one buys a house, it is hard to imagine losing more than half the cost of moving out, which has to be called a form of robbery. However, the sale and purchase of houses in retirement villages is restricted by law, for example, to ensure that only retired people can live in the villages, and that no one under the age of 55 can buy a house. As the manager has a certain degree of responsibility for maintenance, the cost of operation is often added to the usual management fees and exit fees. Even apart from the exit fee, the renovation fee when residents decide to move out is also a huge cost. Many residents are asked to pay for painting and carpet replacement, and some are even asked to pay for more extensive renovations, with some quotes exceeding $100,000 for a three-page remodeling list that includes a number of options. The explanation given by the operators of retirement villages is that the cost of renovation has risen sharply since the outbreak of the epidemic. Not to mention that if a person dies or leaves the Village, their home will continue to be subject to maintenance fees until it is sold.
Some would describe this as an elaborate scam, but the operators see it as the price to be paid by the users of the retirement villages. Most retirement villages feature an operator who sells the property and sets the price, which is convenient for the seller but can also cause conflict because the operator effectively controls the market, including price, time of sale and buyer selection, especially when residents are eager to sell. Sreyfel lost tens of thousands of dollars in less than three years of living at the V.I. retirement village, and was left with only $243,000 after paying $310,000 in 2017. She left after a confrontation with residents and management, and says it took her four years to get back on her feet. A person who enters a retirement village with the intention of enjoying a peaceful life can find themselves in a lot of trouble. Many people think it’s unfair that not only do retirement village operators fail to provide value-added to users, but they even have to sell at a reduced price because housing prices are rising every year. However, the rise in housing prices is only a norm in metropolitan areas where the population is increasing. In some rural areas, the value of housing decreases due to aging, which also occurs occasionally.
For Chinese immigrants, it is hard to imagine that retirement villages were originally intended to provide a form of supported living for the elderly together in the same community, rather than nursing care. As a result, it is only when an elderly person enters the need for personal care that he or she realizes that it is not appropriate for him or her to continue to live in a retirement village. In some retirement villages, nursing care may be provided, and the elderly may be able to transition to nursing care in a familiar environment, while those who need to leave for another care facility may not understand the reasons why.
Where has the government gone?
The aging population has always been the lasting support for the retirement industry. Moreover, the aging trend of the Australian population is still intensifying, and it is unlikely that it will be effectively improved in the short to medium term. Therefore, demand for the industry will always exist, and there is still room for the long-term development of an industry such as retirement villages, driven by demand. The Government should intervene in the direction of rectifying the unfair terms and conditions and the high fees charged by the operators, rather than letting them go unchecked and allowing them to develop in a distorted manner in a regulatory vacuum.
In fact, the scandal of retirement villages is not a recent development; in 2017, Australian media group Fairfax Media and Australian broadcaster ABC’s program Four Corners launched a joint investigation into the retirement industry (especially retirement village operator giant Aveo), exposing Aveo’s high fees, contracts, and misleading policies towards its retirement village residents. The Australian Competition and Consumer Commission (ACCC) launched an investigation into the Aveo Group and called on national regulators to cooperate. Seven years on, the situation in the industry has not only not improved, it seems to be getting worse.
State governments have promised to overhaul their oversight methods, but nothing has materialized. Victoria, for example, held a parliamentary inquiry and made recommendations that were endorsed but not put into practice. The new state did make some minor changes after the survey, such as limiting the amount of time operators have to pay residents when they leave the retirement village, but it has avoided the most serious issue – exit fees – and has not discussed whether exit fees should be banned or at least limited to a maximum amount, or whether an inspector should be appointed, and so on, and so on. This is rather like the root of the tree not moving but the top of the tree shaking in vain.
Taking Canberra as an example, the Retirement Living Council predicts that the number of people aged over 75 will grow by 75% in 20 years, and the occupancy rate of Canberra Retirement Village has now reached 95%, the highest in Australia. A silver hair tsunami is inevitable. No one wants a retirement village to end up as a torturous alternative to the prison that once you’re in, you can’t get out. Currently, one in six older Australians, including those living in retirement villages, are abused. Abuse can take many forms, including neglect, financial exploitation, physical violence and psychological abuse. A more systemic form of abuse is the one that is often overlooked but has a wider impact, and retirement villages, now in a regulatory vacuum, may be a reflection of that systemic abuse.
In terms of responsibility, the Government has the duty to explain the principles of the retirement village system to the elderly immigrants, and to make them understand that the life in the retirement villages is definitely not an investment in real estate, so as to enable the retirees to make choices that suit their own needs in life.