I am loving the feedback I am receiving from my ‘Frank’ opinion pieces. The conversations are starting, which is great.
Many people are telling me my opinions in general are ‘just plain wrong’!
Some people – village residents – are telling me that I am wrong to say that residents are ‘happy’ in villages.
A very few village operators have said I am wrong to publish these negative resident comments about villages.
I think both these views are wrong. I believe nearly all people are ‘happy’ living in villages. And village operators should welcome criticism and address it, rather than running away.
Today I want to respond more fully on the subject of resident happiness, or otherwise.
I have access to a lot of research on which to base my views, while I would contend that the critics of villages have only the research of the limited people they have contact with.
Happy or not
The two main messages around ‘unhappiness’ that have been thrown back at me are that residents are financially trapped when they join a village – they can’t afford to leave if they wish; and operators bully residents. I’m going to deal with the first of these today,
My views are formed by the 200+ residents I have interviewed over nine years in every state of Australia, from low to high priced villages, both private and not for profit. I can add my own experience assisting my mother in law into a village (that incidentally had a very bad operator reputation). But most importantly, I have gone back to the research.
I have access to a lot of research on which to base my views, while I would contend that the critics of villages have only the research of the limited people they have contact with.
However the critics also say that the retirement village research – including our own McCrindle Baynes Resident Surveys – is biased. They say that residents are afraid of the village manager seeing their response to surveys and put in ‘happy’ answers when they are actually far from happy.
About that research
So let’s address the research issue first – our research. In 2011 and 2103 we contracted one of Australia’s leading market research companies, McCrindle Research, to carry out independent census style pen and paper surveys of residents of retirement villages. The surveys were huge by any standards. 10,200 residents in 2011 and 5,200 in 2013. Every state and type of village operator was covered.
Both surveys are the largest ever undertaken with village residents, in the world. They are the largest pen and paper surveys in Australia except for the Federal Government Census. Each survey had close to 50 questions.
Most importantly, they were both 100 per cent confidential, with absolutely no way that an individual could be identified. In 2011 a sealed envelope was included with each survey. In 2013 a permanent adhesive sticker was used to seal the booklets that could only be opened by a machine.
Both surveys delivered consistent results, despite there being no crossover between the two, of the people surveyed.
I will refer to the 2011 results as it was the larger sample and it went to every resident in each village.
On the subject of ‘happiness’ here is the question and the results:
________________________________________
Q27: “How would you describe your overall happiness in the village?”
Extremely happy 1,704 17%
Very happy 5,300 52%
Somewhat happy 2,224 22%
Not at all happy 316 3%
Total 10,178 100%
_________________________________________
Three percent of all residents were ‘not at all happy’. Why were they not happy? There could be a multitude of reasons, including the fact they feel trapped or bullied. But it could also be financial strain, or bereavement, or ill health that affects their overall feelings. And each of these could be affecting the 22 per cent who are ‘somewhat happy’.
To give an example, in the same survey 14% of people had basically joined a village they could not afford – so they were financially stressed from day one:
_________________________________________
Q12: “In your first year in your village, did you feel financially secure? Could you manage your budgets and meet costs comfortably?”
Yes, I could meet cost comfortably 8,648 86%
No, I had to be careful with my 1,432 14%
expenses so I could pay all my bills
and costs of living
Total: 10,080 100%
_________________________________________
Which get us to the point about residents being trapped.
Residents are mature adults
People signing up to join a village are not kids. They are mature, worldly adults. They know this is a big financial decision, no different to buying any apartment or home. They have the opportunity and the responsibility to get legal and financial advice. Once they have made the decision and sign a contract, they are committed with their decision.
But buying an apartment anywhere is also a potential trap. If they discover 12 months after moving that the body corporate (the other apartment owners) is escalating costs beyond their budget, or that there are parties every Saturday night or the building manager is aggressive, then they will likewise feel trapped or face the significant costs to sell and move.
They paid stamp duty to buy in; to sell they will pay real estate agent commissions and legal fees. To buy another home there are more fees and stamp duty. With many elderly people being pensioners, these costs are significant.
So why are villages considered to be different? Why should operators be criticised for ‘trapping’ residents when residents are the same intelligent people who buy apartments every day?
Consumer protection
In fact potential village residents have far more legislation, regulation and protection, with required information disclosure every step of the journey up to finally buying. Apartment buyers don’t have this.
Apartment or house buyers have to make a firm deposit that they will lose if they do not complete the purchase by fixed deadlines – whether they have sold their old home or not. Village buyers can make a 100 per cent refundable deposit and have months to sell their home before buying the village home; there is no deposit risk.
People argue the DMF (Deferred Management Fee) is a financial trap. We can discuss this in more detail next issue but I ask, is it? People know about it before they sign, or they should now about it, being adults. So why is it a trap set up by operators? The resident didn’t have to enter the deal.
There are other fees as well perhaps and we can discuss those in the next issue as well.
Meanwhile, what do you think?
*And a reminder, I am not a village operator and have no financial interest in any retirement village or village group.
Discussion5 Comments
Chris, Good sensible analysis in my view.
There’s no question in my mind that the majority of residents in most villages I know happily appreciate the real values of ‘community-style’ of living.
The social side is usually a really easy fit mainly because most residents share age-common aspects: finished raising kids years ago (well almost, if one ever does finish raising their kids!!), experienced often common hardships in their working lives, many equally span long marriages, they experience similar age-health issues, they share old-time memories, all cheer at the joys of downsizing, most like a tipple or two, same sort of music, films, fun … the list goes on and on. We all love it.
Those benefits go a long way to overcoming financial unfairnesses still being perpetrated by those rogue operators who greedily persist in dipping into residents’ pockets and purses by exploiting present ambiguous legislation which often Tribunals themselves seem to fail to fully understand and apply fairly in their decisions or recognise Parliamentary intention at the time the legislation was drafted.
For the future though, I’m hopeful that more and more residents will get to experience much sought after peace and contentment living in their retirement villages as soon as all the stakeholders decide to get together and concentrate sensibly and fairly on improving and clarifying the present ruling legislation.
Fortunately, the statutory five year review of the provisions of the existing Regulation are scheduled by NSW Government to commence within the next few months so surely there can not be a better opportunity for residents, operators, the appropriate Ministers and their advisors to unite as one, and add great advantage to the equation by fixing the financial aspects governing this industry so, like in every fairy tale worth its salt, everyone just might be able to live happily together ever after.
Neil Smith
Life in a village has lots of pluses but it amazes me how little my operator (one of the biggest) knows or perhaps more importantly, cares about the interests of its residents. When entering a village, we essentially put the rest of our lives in the hands of the operator. We expect transparency, honesty and perhaps even consultation in matters affecting us. We do not expect lies or obfuscation of which we have had plenty. Recently, whilst telling us we were a completed village the operator was secretly submitting a development application to extend the village. This extension is opposed by most residents especially given the operator has been reluctant to provide details of any extension to communal facilities.
I could go on about many other areas especially in the field of timely and accurate financial information, the provision of believable information concerning relevant statutory provisions etc., etc.
This is a shame because it usually would not cost the operator a lot more to do things properly. It just indicates that the bottom line is all that counts to them.
I
Hi Neil,
Thanks for your balanced comments supporting the overall proposition that the vast body of evidence points to villages delivering a very satisfactory quality of life. Your balance is especially appreciated when we consider that you and your colleagues in your village have had to fight the good fight with your operator who in the financial arena is less than fair.
It is important for village residents to clearly voice the areas they would like to see changes in the administration of villages, mindful that they are businesses and expectations have to be within this framework. Operators too have to be mindful that residents are their customers and their business and the sector will only prosper if the customers are indeed happy with their side of the deal.
Please ask your residents colleagues to join the conversation here on Frank & Earnest. Their views will be heard.
Warm regards
Chris (AKA Frank)
9 June 2015
To: Christopher Baynes – Frank and Earnest
From: Pamela Judge, President of SARVRA
Are retirement villages really such unhappy places?
Research is not always accurate!
Ah Chris this topic really hooked me!
As President of an Association of Residents with over 6000 individual members residing in 520 plus villages I feel that I cannot let your article go unchallenged. Whilst we recognise that within our community there are many residents who are delighted with their decision to move into a retirement village, conversely, we also need to recognise that within the industry there are some operators who see retirement villages as an easy money making investment without any responsibility – or at least an ability to ignore these to the detriment of residents. These rogue operators particularly, and those who consistently make ‘small breaches’ need to be forced out of the industry and it is up to the industry to ensure this occurs or face greater and more restrictive legislation.
You have had access to 200+ residents and of course you have had access to the research project. With great respect I am concerned you feel that this gives you enough information to make considered decisions upon. You are presenting a different viewpoint to that that we see here in South Australia and I suspect, Australia. In saying this I would hasten to add that I believe that the quality of ownership of villages may have deteriorated over the past few years that makes surveys only correct that time and should not continue to be quoted as absolute fact. Even if your remarks were current to today’s standards 200 of the 25,000+ residents in this state is a mere drop in the ocean: Australia wide it is an insignificant number. I am also concerned that at the time of the last survey some residents who participated were required to give their survey form comments to their managers who said they were to return these forms to them for forwarding on to the researchers. (see note at the end of this document)
Let me tell you about some of the issues that cause concern. Recently I worked with a client whose home was near the village development and, with others, was on land the developer wanted. The original document said that the owner could stay in their own home for the time they wished and when ready they could move into a unit and also receive some cash entitlement. Whilst they were away holidays the operator sold the home and the people had to move into operator owned apartment. The operator then went into receivership and these people (more than one family) are still in the apartment 7 years later and may never get their unit or other money owing to them.
There are also operators who are not so careful with resident funds. Some resident committees are more astute than others and have financial sub committees. In one village research back over several years has identified overcharging to the amount of $100,000.00+. Some operators do not accept the concept of Residents Committees regardless of the Act or the Regulations. There are managers who do not talk to residents committees, and vice versa. There are residents committees who are actively encouraged by operators to not discuss issues relevant to the village residents under any circumstance to the extent that minutes of meetings are not available. Frankly, Frank, there are operators who connive and contrive to take as much money from the residents as they can for the minimum of service. They have blatant disregard for promises made, regulation and rules.
I think we need to get some of this financial stuff in perspective. Often the catalyst for looking into moving to a retirement village is because there has been a significant event in a couple or individual’s life that makes the perceived security of a village seem attractive. People wander in and are shown these great places with a variety of great activities such as pools and bowling greens, not really comprehending that they will be required to pay for them for the time that they dwell in that village, whether they make use of them or not. In the excitement of finding a wonderful new home these things just slip by the considerations that people should make. Similarly, those who have been private individuals may become stressed living in the larger, highly active villages where everything is laid on. Regardless of the fact that we encourage potential residents to seek legal and financial advice before signing the contract surely there ought to be some responsibility on the sales person to ensure that people really understand these issues. As a whole entity (residents and operators alike) we ought to be encouraging lawyers and law school students to better understand the complexity of contracts that exist for retirement villages throughout Australia. Residents of one village that had entered receivership, in this state were told by the local law firm that they owned the building but not the land – how one can own bricks and mortar on unowned land is still a mystery to me.
Consumer protection
I often sit back and ponder my decision to move into a village. If I had not become involved in SARVRA I don’t think this would have occurred. But let’s look at a reality. When moving into a retirement village one gives up their status as a home owner and buys a lifestyle (at an often inflated price for the property) for their remaining active years for which they will lose a certain amount of the interest free loan that they give the operator. On departure, your estate, or the resident if leaving for other reasons, is possibly going to have over 30% (or more) deducted for a various amount of fees and charges. In some instances living residents who have moved out for varying reasons currently have to wait for a sale before they get their exit entitlement – this can take five or more years if the operator does not make efforts to sell- and this does happen – residents cannot generally sell their property, as they do not own it. This type of delay is unconscionable for ex-residents who somehow have to find cheap rentals to reside in and even for those relatives who are attempting to finalise an estate. Recently, a unit sold at 15% below the original purchase price and in addition to the remarketing fees the operator attempted to charge the estate for the loss as a “special remarketing fee!” We have new “owners” arriving at a village telling the residents they are all going to be given totally new contracts that they have to sign – that is against the legislation and yet ignored by the operator.
We, sadly, have village managements who believe that they can tell residents what they can and can’t do. We have had instance of menus being changed without consultation and to reduce costs and residents having to go out and purchase own food supplies for some weeks until the issues were resolved. Residents often report issues that are blatant bullying, and to be fair I believe there are managers who also experience this from some residents. Some residents telephone me to discuss issues but are afraid to do anything because of the fear of repercussions. There are operators and their staff who say that residents should be grateful for living in their village without respecting that residents have paid for the privilege. There are managers who quite simply refuse to consult with residents or residents’ committees, making arbitrary decisions on how the village will operate and even fees and charges and annual village budgets. There are managers who still do not understand that they are there to support, assist and advise the residents and that they should clearly know the hours for which they are employed in this role and the hours for which they work for the operator.
So what is my conclusion? Overall, I too, have reached the conclusion that I consider that many people are happy in their retirement villages but I would say that there is a caveat in that there are many who quite simply are not because of:
1. inappropriate operators;
2. poor management systems;
3. residents not understanding their contract;
4. false promises made by sales people;
5. residents having issues of concern misrepresented by sales people;
6. residents inability to afford to continue living in a village because of fee increases greater than expected;
7. poor communication with, and by, management;
8. poor communication by residents;
9. higher expectations that those offered; and,
10. a simple unsuitability to living in such close confines and restrictions.
Nonetheless if 1 resident in 100 is unhappy in their village that is still too high and residents’ associations and operators should be working to resolve these issues.
I write this with the clear understanding that I live very happily in my retirement village and for that I am truly grateful: especially since following a recent remark I made that led to an immediate resolution of an issue arising over four years ago that the then manager had said could not be resolved. THAT, my friends, is great service. It also goes to show that good communication by all parties can resolve many issues and this raises the issue of the better selection of trained and experienced managers.
With my great respect for the work that you do,
Pamela Judge
President
SARVRA
PS: I sent this document to one of my ‘fact checkers’ and he responded with the following comment:
“Hi Pam,
Agree with everything you gave written. We agree that speaking to 200 residents and the results of the survey from around Australia is very minimal. We did respond to that survey & it was odd that responses had to be sent via village managers. I know that some people in our village were uncomfortable with that.
D”
I did not know that he had participated in the survey.
A Survey of this small number doesn’t cut it for me! Worse: Village Managers ‘had to be sent’ via makes it a joke!