All operators of retirement villages must prepare and keep up to date an asset management plan that complies with the Act and the Retirement Villages Regulation 2017.

What is an asset management plan?

An asset management plan documents the costs of purchase, and ongoing maintenance, repairs and replacement of a retirement village’s major items of capital, including shared major items of capital.

The plan must include the following content:

  1. an asset register of the village’s major items of capital, including information about the effective life of items of capital and
  2. a maintenance schedule of the village’s major items of capital, including information about capital replacement, and
  3. operators must also prepare a three-year report for capital maintenance extracted from the asset management plan to inform expenditure for the annual budget.

What is a major item of capital?

A major item of capital is an item of capital for which an operator is responsible, that has a purchase cost of $1,000 or more, or is part of a group of similar items of the same effective life and acquisition year, and has a combined total purchase price of $1,000 or more.

Operators cannot charge residents for maintenance or repairs of a major item of capital if the item is not in the Asset Management Plan.

What is an asset register?

An asset register is a list of major items of capital for which operators are responsible and for which residents pay maintenance.

Operators must record all new and existing major items of capital in the asset register, including those items they share with other villages or aged care businesses.

The asset register must include the information specified in the Regulation.

What is a maintenance Schedule?

A maintenance schedule sets details for maintaining and replacing the major items of capital funded by recurrent charges or from the capital works fund.

This schedule includes items shared with other villages or aged care facilities.

Operators must include certain information about their planned maintenance, repairs, and replacement activities (including estimated and actual costs) in the schedule.

The maintenance schedule must include the information specified in the Regulation.

What is a three-year report for capital maintenance?

Operators must include certain information about capital maintenance in the proposed annual budget.

Operators must prepare a report of three years of capital maintenance extracted from the maintenance schedule and include it in the proposed annual budget.

The report must include in relation to the proposed maintenance and repairs of each item of capital:

  • an estimate of the costs, dates and type of proposed maintenance, and
  • an estimate of the costs and type of any proposed repairs.
  • the amount of recurrent charges set aside in the capital works fund for capital maintenance.

Interaction with the existing annual budget process?

The three-year report informs the annual budget itemising the proposed maintenance costs for three years. Residents can provide or refuse their consent to expenditure in the proposed budget.

Keeping the asset management plan up to date

Operators must update the asset management plan, when:

  • purchasing major items of capital,
  • if the three-year report was amended and approved during the budget process,
  • after each time undertaking maintenance or replacing a major item of capital,
  • the total costs of capital maintenance estimated at the commencement of the plan are likely to increase by 25 percent or more (excluding CPI increases).

Who must have access to the asset management plan?

Operators must make the most up to date version of the asset management plan available at the village or at a place of business in New South Wales, for inspection by a resident or prospective resident or a person acting on their behalf.

Secretary Guidelines for Asset Management Plans

Section 189B of the Act enables the Secretary to issue Guidelines to assist operators in complying with their obligations regarding asset management plans.

The purpose of these guidelines is to:

  • explain what you need to record in an asset management plan,
  • outline your asset management reporting obligations,
  • explain how asset management will inform and link with the existing budget procedures under the legislation,
  • suggest a process for when an item needs replacement,
  • provide a template for you to use when developing your asset management plan, and
  • provide general guidance (not legal, financial or taxation advice).

The Tribunal may take these Guidelines into account in determining whether there has been compliance with the Act.

Link of the original post is here https://www.fairtrading.nsw.gov.au/housing-and-property/retirement-villages/asset-management-plans