Many have forgotten (or are too new to the sector) that Aveo has a class action against it based on the claim back in 2016 it basically swindled residents and their families out of potential capital gains by talking them into swapping contracts from strata to an Aveo Way lease licence.
Aveo didn’t ‘swindle’ the residents but Australian lawyers funded out of New York will be making a money grab in court next month in Melbourne just the same. (They win fees of 30% of any payout).
But here is the thing: the media is already looking for a good story around a big (private) retirement operator taking advantage of elderly Australians. It will stoke the old fires of the 2017 Four Corners/ABC/Fairfax ‘Bleed them Dry Until They Die’ campaign that hit all village sales by 30% for three years. The sector lost over $3 billion in value.
If the court finds against Aveo, expect another big sales hit for all retirement villages.
And here is the second thing: has the sector learnt to proactively build credit in the community for the good work it does to ward off such attacks? No; trust and respect languishes just where it was in 2017.
Over the six years since 2017, the Retirement Living Council has issued an 8 Point Plan, a Code of Conduct and an Accreditation program. But only a negligible number of the RLC members have taken them up and few are actually complying with all the requirements. Just a few Not For Profit village operators have engaged.
In New Zealand, nearly every village operator belongs to the Retirement Village Association and all comply with all that is required of them.
The RVA is funded and proactive, taking meaningful initiatives before issues arise. They have had for years a ‘social license’ with the community and Government. They invite a resident representative to their board meetings. They do educational roadshows across the country in partnership with the Government. And the village sector is valued, is respected and has trust.
The class action is just one example of why the Australian sector has to wake up and start strategising. Another reason is that competitors are identifying the retirement living market that is being left open by village operators. Land lease communities, Build To Rent and CAPs are stealing customers early – at ages 55 to 75 – before they reach village decisions.
And these new competitors are being proactive, legitimising their value proposition in the community and with regulators. They are receiving preferential treatment. Village operators are not, preoccupied with more and more regulations.
In this newsletter we have a story on Daniel Gannon, the new Executive Director of the Retirement Living Council, who is traveling the country knocking on state and federal minister doors, being heard. The sector needs to get behind him and jointly develop proactive strategies – fast.
