Regulation required to stop the harassment of those who have invested in retirement homes
Once again, it is probably the judiciary that may come to the rescue of senior citizens who have invested their nest egg in retirement homes and end up fighting bitter battles with developers instead of the restful luxury they expected in their golden years. S Krishnamoorthy, an 80-year old air-force veteran, has filed a public interest litigation (PIL) asking the high court to direct the Tamil Nadu government to set up a specific regulatory authority to for senior citizens’ homes in the state. At the first hearing in September, a two-member bench, comprising Chief Justice Sanjay Kishan Kaul and Justice TS Sivagnanam, was sympathetic to his plea, despite a sketchy petition and directed the state government to file a proper response by 24th November. Irrespective of what happens in the case, there is no doubt that the senior citizens, who invest their hard-earned money for proper accommodation and facilities (in these private projects), are not made to run from pillar to post to get the services they were promised.
Retirement homes are a niche new real estate market segment that has grown steadily over the past two decades by promising well-to-do Indians all their needs in old age – food, house-keeping, laundry, healthcare facilities, recreation and companionship of people of their age group. But the reality is often vastly different. Services and maintenance standards decline, costs escalate and the terms of the original agreement are changed with no recourse to the senior residents. Mr Krishnamoorthy’s petition arises out of his own experience and the tribulations of other senior citizens who opted to live in retirement homes that have mushroomed around the picturesque Coimbatore region of Tamil Nadu.
Is it enough for the Tamil Nadu government to create a regulatory framework for the state alone? With changing demographics, higher income in the hands of seniors, security concerns and the paucity of domestic help, well-run and regulated retirement homes and townships will be essential for future generations. In many cases, it will be the only way to ensure that a secure environment, companionship, nutritious food and geriatric care or medical assistance is available on a daily basis for those who can afford it.
It is the government’s responsibility to remove the regulatory vacuum in which retirement homes operate and put in place a clear framework to decide who can set up retirement homes, ensure fair and transparent contracts with seniors, proper supervision and swift grievance redress. This will require the ministry of social justice and empowerment to work with the finance ministry to put in place effective regulation. Unfortunately, this is easier said than done in a country where the National Policy for Older Persons (NPOP), framed in 1999, has yet to be properly implemented and we have no real estate regulator so far, because of the industry is controlled by land sharks and politicians.
Seniors will also have to face up to the reality that the concerns of well-to-do people are not a priority for any government. Even NGOs working in this sector are, correctly, engaged in mitigating far greater hardships and travails faced by the poor, destitute, infirm and abandoned seniors. While the Madras High Court has taken cognisance of Mr Krishnamoorthy’s plea, real change will require a proper framing of issues and advocacy at the national level with the appropriate ministries or even a class-action suit. Here are some of the issues that need thinking and clarity while framing such a policy.
1. Who Can Set Up a Retirement Township/Homes: Unlike old-age homes that are run by charitable organisations, retirement townships are for senior citizens who can afford a certain lifestyle and amenities and are willing to pay for them. It requires deeper pockets and cannot be set up by charitable organisations/NGOs or as a family enterprise. Although realty is a state subject, the process of granting clearances to set up retirement homes and townships needs to have a national regulatory framework, under the ministry of social welfare. These should only be permitted when basics, such as access to specialised medical care, are available at a reasonable distance and security, access and communication are in place.
2. Minimum Assurance of Services: Regulations should specify the basic minimum services (security, food, housekeeping, laundry, maintenance and basic medical facilities, as well as recreation and exercise facilities run by appropriately trained and supervised staff) that need to be in place to set up a retirement project. Decisions regarding the selection of service-providers, supervision, audit of expenses and cost escalation must be through a management structure that has adequate representation from residents, chosen through an election process.
Anyone setting up a retirement home must be able to commit specified minimum capital to be able to ensure maintain and all the promised services for at least five years. There are plenty of documented cases where seniors have had a harrowing time because of poor catering, laundry or housekeeping services and the promised medical facilities and basic check-ups, which used to lure seniors, are quickly shut down. On the flip side, seniors will have to be prepared to maintain deposits to meet their monthly payouts and to cover emergencies and contingencies.
3. Structure of Agreements: Ideally, seniors must be able lease rooms or apartments in such townships with provisions for deposits (refundable and non-refundable components) with monthly payments for food, maintenance and other costs. India has a few well-run retirement homes on outright purchase but they are an exception. In several retirement homes around Coimbatore, retirement complexes have been set up by families but are positioned as not-for-profit societies. The apartments are given out on 20-year lease agreements, renewable for another 20 years. While the terms were well thought out on paper and seemed to ensure lifetime security for a senior, it turned out that these entities were not registered, making the lease agreement itself legally tenuous. Escalating land prices worked to the advantage of the promoters who were able to nudge tenants to leave through unreasonable escalation of monthly charges or poor service. The apartments were then leased again at higher rates. Several seniors caught in such a trap have filed a court case, but the judicial system in India is a slow and expensive grind.
4. Costs, Supervision, Accountability, Audit & Redress: One retirement home in Tamil Nadu has forced at least 10 seniors to file lawsuits after they were threatened with eviction or being denied food and services, when things turned seriously acrimonious. Only a proper regulatory framework will ensure that seniors do not become the victims of such dirty tricks, instead of the peaceful retirement that they paid and signed up for and that residents’ representatives have access to accounts to ensure that cost escalation is fair and reasonable.
5. Exit Option: The government must ensure that no senior is trapped into retirement homes by ensuring that there is a clear exit option in each contract. Ideally, retirement homes must only have a lease and deposit arrangement because of the high cost and restrictions of selling property in a retirement township.
Putting in place a regulatory framework for retirement homes is not a very difficult task, since most developed countries have already been through this phase of development where seniors in nuclear families felt the need to move to retirement homes for the benefits they provide. In fact, this is a $260 billion industry in the US and growing; if run well, it will be an important market in India too. Pushing the government to set up an appropriate framework needs advocacy from influential seniors, to make it happen. No one else is likely to do the job for them.
(Sucheta Dalal is the managing editor of Moneylife. She was awarded the Padma Shri in 2006 for her outstanding contribution to journalism. She can be reached at [email protected])