Unlike most other States, Victoria does not have a stand-alone piece of legislation governing land lease communities and caravan parks.
Instead, the Residential Tenancies Act 1997 (VIC) (RTA) provides the legislative framework for all residential tenancy arrangements in Victoria, including in caravan parks and land lease communities (called ‘residential parks’ in Victoria).
On 6 September 2018 the Victorian Parliament passed the Residential Tenancies Amendment Act 2018 making sweeping reforms to the RTA, a significant number of which directly impact owners and operators of caravan and residential parks in Victoria.
The detail and roll out of the reforms will occur progressively and the intention is it will be completed by 1 July 2020.
A summary of just a few of the changes impacting operators of residential parks and caravan parks in Victoria is below. A full list can be accessed at https://engage.vic.gov.au/fairersaferhousing.
We will keep our clients and readers updated on the roll out and the details of the changes when they come into force.
If you are an owner/operator of a residential park in Victoria, you will need to consider how your operations and proforma standard form site agreement, park rules, disclosure material and home sale agreements may need to be amended to comply with the RTA as amendments are rolled out.
Please feel free to get in touch with us to discuss this.
Some of the key changes owners/operators should be aware of
1. New disclosure requirements—There will be a number of new disclosure obligations on park owners including a requirement to (before entering into a site agreement) disclose to prospective residents:
• more information about any exit fees / deferred management fees charged (details of the new disclosure requirements will be prescribed in regulations, but the expectation is they will be similar or the same as that required for retirement villages);
• if the park operator does not own the freehold of the park land, the nature of the interest held and any limitations on the park operator’s right to grant interests in the land to residents (e.g. if you own the park land in a trust structure and lease it to an operations entity, you will need to disclose that you cannot grant a site agreement for a term longer than the term of the head-lease to your operations entity (noting options in head-leases are discounted); and
• any current proposal to sell the park.
2. Prohibited terms—As is already the case in QLD, Regulations will be passed listing what the RTA will deem “prohibited terms” for site agreements. Once the Regulations are passed it will be an offence to include a “prohibited term” in a site agreement. Obviously, the devil will be in the detail here. Operators will need to be ready to change their proforma site agreements when the new Regulations come into force.
3. Rent increases—Rent under site agreements will not be able to be increased at intervals of less than 12 months. Site agreements will be able to specify rent increases are either by a fixed amount (according to a specified method of calculation (e.g. fixed %) or by a non-fixed amount (e.g. market review). If a fixed amount is used, the operator must give 28 days’ notice of the increase in the prescribed form. Fixed rent increases cannot be subject to rent review by Consumer Affairs Victoria. Non-fixed rent increases will be subject to rent review by Consumer Affairs Victoria.
4. Removal of termination right—Park operators will no longer be able to terminate periodic site agreements for ‘no specified reason’. Park operators will be able to issue a notice to vacate at the end of a specified period of occupancy under a residency right, or end of a fixed term site agreement.
5. Compulsory compensation—If a park is closed, the park operator (who owns the park) will have to pay compensation determined by VCAT to residents who own fixed dwellings in the park. The amount of compensation payable will cover reasonable relocation costs for the resident’s dwelling or compensation for loss of residency if the dwelling is not being relocated.
6. No commission where not effective cause of sale—A park operator who enters into an agreement to sell a moveable dwelling on behalf of a resident must not charge a commission for the sale unless the operator is the effective cause of the sale, and the buyer is not the operator or a related party of the operator.
7. New maintenance and repair obligations—There are a suite of new provisions placing specific maintenance and repair obligations on the park operator (in relation to communal facilities, sites and fixtures on sites owned by the park operator) and also on the site tenants in respect to their dwelling (including to rectify defects before the sale of dwelling where the site agreement will be transferred to the buyer).
8. Restriction on repair obligations in park rules—Park operators will be prohibited from making park rules that require park residents to undertake significant works on a dwelling other than for reasons of reasonable cleanliness, safety or good repair.