The buyback regulations in Queensland are really beginning to hurt village operators, with early signs of village insolvencies appearing.
Last week an attractive 45-home village at Tin Can Bay, 80km north of Noosa, went into receivership because the owners could not find the cash to pay out the departing residents 18 months after their homes were vacated.
The regulations affect private village operators that have contracts where the resident is a ‘registered interest holder’ and likely sharing in the capital gain or loss on the sale of the property. These are predominantly ‘lease license’ contracts.
Also last week, the NSW government finalised its new buyback regulations. In summary, an operator will be required to pay out the departing family after six months in metropolitan areas and 12 months in regional areas after the home is available for sale.
‘Available for sale’ means when the home has had its refurbishment completed and contracts etc. are ready. In most cases this adds another three months.
An important condition is the operator can be exempted from the buyback payment if they can demonstrate they have used all reasonable efforts to market the home.
For village management, making the most of every sale enquiry and detailed record keeping will be vital.
In other states, 18-month buybacks are the norm.
The message is every sale opportunity is important because accumulated stock will be very expensive for the operator and unsatisfactory for the resident and their family.