This week’s question is around annual budgets and finances.
Question As a new resident in a NSW retirement village, I’m faced with annual budgets for estimates of operating costs and asset maintenance costs for the next financial year. I am confused about what will be involved. Can you provide a quick summary?
RVRA Answer In a retirement village, the residents need to be aware of who pays for what expense: The operator or resident. The annual budgeting exercise and negotiation helps determine how costs are shared. There is sufficient legislation and regulation, as well as Government guidelines, available to define what is required. As a simple summary, the discussions usually focus on:
- Annual budget for recurrent charges to be paid by residents – usually presented to residents for approval two months prior to the start of the village’s next financial year
- An Asset Management Plan – this is new legislation which will apply to a village’s financial year commencing after June 30, 2022, detailing what operator-owned assets are to be maintained or repaired at the cost of the residents, or replaced or repaired at the cost of the operator
- Capital Works Fund – residents’ funds set aside for asset repairs and maintenance costs arising more than one year into the future
The RVRA receives many enquiries from members asking for help in understanding the procedures and the expenses allocations each year.
We have advocated for several years for greater transparency in cost recoveries from residents and there are still many issues which remain to be resolved.
Help us to help you by becoming a member today. Remember it is your money that the operator is using!
Learn more about the RVRA HERE.
