Personal Finance

Retirement home guidelines are finally here

Meera Siva | Updated on March 17, 2019 Published on March 17, 2019

The foundation has been laid, but it needs to be built on

Senior living communities have been in existence for a while. But unlike in western countries, these facilities have not been under any regulation in India. Recently, the Ministry of Housing and Urban Affairs came up with model guidelines for the development and regulation of retirement homes. This can be used by State and Union Territory governments as a model to regulate retirement homes. It calls for steps to improve transparency in fund utilisation, disclosure of the technical skill of the service-provider when executing the agreement, various compliances on building codes, and minimum facilities that must be met.

The need

There are currently no regulations to ensure minimum standards of living in non-commercial or commercial living facilities to ensure the well-being of seniors. The Ministry’s document focusses on the needs of the urban upper- and middle-income segments that currently rely on an unregulated and underdeveloped market for accommodation and services. The guidelines note that “while this segment does have the financial ability to pay for facilities and services, it is not adequately protected from cheating, exploitation and other forms of harassment.”

There have been issues reported on the lack of care. For instance, a Public Interest Litigation (PIL) filed in the Madras High Court in 2015 led to the Tamil Nadu government issuing a detailed order that laid out minimum requirements for retirement homes and mandating the registration of agreements.

However, implementation was not easy and there was another PIL by a resident of a retirement home called Tapovan in Coimbatore that noted that high fees were charged, but the minimum standards prescribed in the government order were not provided. This led to the government cancelling the registration of Tapovan. There were also similar alleged deficiencies in two other retirement homes in Coimbatore — Nana Nani Homes and Dhyanaprastha Foundation.

Also, a 2017 study by Moneylife Foundation found some alarming data. There were retirement homes without their own ambulances or even wheelchairs; some were in remote areas with poor access to medical facilities.

It was noted that nearly two-thirds of the residents in the homes surveyed had not signed a contractual agreement that defined the terms of the service. Over 70 per cent said there was no residents’ council that would give them a say in the decisions; over half of them were dissatisfied with the services provided, and 61 per cent were unhappy with the medical services.

The model guidelines include various aspects of a senior living project. For instance, it requires that the sale of apartments in the project be permitted only after it is registered under the Real Estate (Regulation and Development) Act (RERA). Besides outright sale, the guidelines also look at the lease model and reverse mortgage.

On the legal side, the document has a sample tripartite agreement (executed by the developer, the senior citizen and the service provider) that covers the various rights of the parties. There are safeguards on financial aspects as well. For example, it covers the refundable interest-free maintenance security deposit paid for the management/service of the residential premises when buying or leasing. One half of this amount must be kept in a bank fixed deposit and the other half may be invested in government-approved securities/bonds. In case the buyer requests a refund, it must be given within three months.

Likewise, it is suggested that maintenance charges be revised only after consultation with the residents’ council and only once in a financial year. The changes may be added as a revision to the service contract or as mutually agreed charges.

There are recommendations on unit sizes, density and design guidelines. There are also guidelines on the width of doors, design of staircases, the need for handrails and other safety features that must be installed.

The document covers service features that must be provided. The properties are required to have common basic services including power, water, hygiene, transport and medical services (including a mandatory tie-up with a nearby hospital), fitness, security and safety, including provision for handling emergencies. The guidelines suggest that 65 per cent of the site area be open spaces; convenience stores that cover 2 per cent of the built-up area or 30 sq metres, whichever is less; community space of 2 sq metres per person (or 500 sq metres, whichever is less); and medical facility that covers a minimum of 15 sq metres/25 dwelling units.

The safety aspect also covers employees — all personnel must submit a police verification report from the local police station. The manpower must be trained for the job; the technical qualifications will be decided by the State.

What it lacks

The report is a good first attempt at bringing some intervention in senior living facilities, but it seems to have been hastily put together, with many areas of improvement. One, there has been no attempt at research or data collection on the ground realities. Knowing the issues first-hand will help formulate guidelines that address the core problems.

Two, there is no discussion on or a provision for filing grievances and any authority to handle the issues. Seniors, due to their age, may be unable to deal with lengthy and cumbersome processes; simple yet effective ways to ensure redressal is required.

Three, there is a need for detailed design guidelines that cover accessibility and safety aspects. While an attempt has been made, a comprehensive report will help in senior-proofing any living space and common spaces such as shops and clinics.

Four, there is no appreciation of the fact that senior homes are a long-term service contract and there is a need to ensure that the facility and service providers are monitored regularly. Rather, the community is viewed as a housing project, which misses the wood for the trees.

The writer is an independent financial advisor

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