❓ Mr. Whitby raises concerns about the collapse of the Sterling First lifetime lease scheme and its devastating impact on retirees in his electorate. The Minister acknowledges the issue, outlines the government's actions, and expresses sympathy for the affected seniors.
AnsweredQoN 415Legislative Assembly
QuestionView source ↗
STERLING FIRST LIFETIME LEASE SCHEME
415. Mr R.R. WHITBY to the Minister for Commerce:
I refer to the collapse of the Sterling First lifetime lease
scheme that has put at least seven retirees in my electorate in a heartbreaking
and distressing situation, including Rod and Tracey King, who are now forced to
live in a caravan. Can the minister advise the house what this government is
doing to support those seniors and retirees whose lives have been truly
shattered by the collapse of this company?
415. Mr R.R. WHITBY to the Minister for Commerce:
I refer to the collapse of the Sterling First lifetime lease
scheme that has put at least seven retirees in my electorate in a heartbreaking
and distressing situation, including Rod and Tracey King, who are now forced to
live in a caravan. Can the minister advise the house what this government is
doing to support those seniors and retirees whose lives have been truly
shattered by the collapse of this company?
AnswerView source ↗
It is truly scandalous what has happened to the elderly in
this particular case. The company concerned, comprising Sterling First,
Sterling New Life and Sterling Income Trust, advertised an alternative to
retirement village accommodation. When advertising its new scheme, it said that
a person could buy into this accommodation for only 60 per cent of what it
would cost to buy the property freehold. They would be granted a five-year
lease and that would be rolled over on five-year options or seven-year options,
meaning that for 40 years, an elderly couple could buy into one of these
schemes for 60 per cent of the value of the house. I just say at this stage
that if it sounds too good to be true, then it is too good to be true.
The 60 per cent up-front payment was meant to generate enough
income to pay the rent for 40 years. When these schemes were advertised, the
department attended the seminars to see what was being promoted, so it acted
proactively. It appeared from the seminars that the Residential Tenancies Act
1987 may have been breached in some technical way. The department also became
concerned that the whole scheme was unsustainable. How could an up-front
payment of 60 per cent of the value of a property generate 40 years of rent? It
was patently absurd. It could not. The department contacted the Australian
Securities and Investments Commission and invited it to look at it. ASIC looked
at the company side, because the Corporations Act is a commonwealth act. In
August 2018, Ferrier Hodgson came in to
administer the scheme on behalf of ASIC. There is a tragedy here because
Ferrier Hodgson determined that the
company had to be wound up. If we think of the priorities in winding up, the
Australian Taxation Office gets its cut first and then the administrator
gets its cut in front of the secured creditors. The administrator's
fees are estimated to be up to $1 million. After that, the secured creditors,
the banks and the mortgagees who funded all this will get their money. The
elderly who have put their money into these schemes stand to lose most of their
equity—most of the money that they put in. The department has been
trying to track down and talk to all these elderly people who have gone into
this scheme to give them a true understanding of what they have signed up for,
to show them what residual rights they may have as tenants during the
administration, to try to assist those who are the subject of eviction notices
by mortgagees or the administrator, to ask the federal government to get ASIC
to investigate possible prosecutions against the promoters of the scheme and to
deal with the Department of Communities and housing and tenancy advocates to
try to get these people into a priority situation on the public housing waiting
list.
It is a tragedy that these
operators have moved in a predatory manner on these elderly people and have
exposed them to losing their lifetime savings. It is absolutely shameful. This
government will do all it can to support these people into return
accommodation. As I said, the lesson for all Western Australians is that if the
advertisement sounds too good to be true, it is too good to be true.
this particular case. The company concerned, comprising Sterling First,
Sterling New Life and Sterling Income Trust, advertised an alternative to
retirement village accommodation. When advertising its new scheme, it said that
a person could buy into this accommodation for only 60 per cent of what it
would cost to buy the property freehold. They would be granted a five-year
lease and that would be rolled over on five-year options or seven-year options,
meaning that for 40 years, an elderly couple could buy into one of these
schemes for 60 per cent of the value of the house. I just say at this stage
that if it sounds too good to be true, then it is too good to be true.
The 60 per cent up-front payment was meant to generate enough
income to pay the rent for 40 years. When these schemes were advertised, the
department attended the seminars to see what was being promoted, so it acted
proactively. It appeared from the seminars that the Residential Tenancies Act
1987 may have been breached in some technical way. The department also became
concerned that the whole scheme was unsustainable. How could an up-front
payment of 60 per cent of the value of a property generate 40 years of rent? It
was patently absurd. It could not. The department contacted the Australian
Securities and Investments Commission and invited it to look at it. ASIC looked
at the company side, because the Corporations Act is a commonwealth act. In
August 2018, Ferrier Hodgson came in to
administer the scheme on behalf of ASIC. There is a tragedy here because
Ferrier Hodgson determined that the
company had to be wound up. If we think of the priorities in winding up, the
Australian Taxation Office gets its cut first and then the administrator
gets its cut in front of the secured creditors. The administrator's
fees are estimated to be up to $1 million. After that, the secured creditors,
the banks and the mortgagees who funded all this will get their money. The
elderly who have put their money into these schemes stand to lose most of their
equity—most of the money that they put in. The department has been
trying to track down and talk to all these elderly people who have gone into
this scheme to give them a true understanding of what they have signed up for,
to show them what residual rights they may have as tenants during the
administration, to try to assist those who are the subject of eviction notices
by mortgagees or the administrator, to ask the federal government to get ASIC
to investigate possible prosecutions against the promoters of the scheme and to
deal with the Department of Communities and housing and tenancy advocates to
try to get these people into a priority situation on the public housing waiting
list.
It is a tragedy that these
operators have moved in a predatory manner on these elderly people and have
exposed them to losing their lifetime savings. It is absolutely shameful. This
government will do all it can to support these people into return
accommodation. As I said, the lesson for all Western Australians is that if the
advertisement sounds too good to be true, it is too good to be true.
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