Victoria's Capital Maintenance Plan: What Section 38BN Requires of Retirement Village Operators

On 1 May 2026 a new duty landed on Victorian retirement village operators. Section 38BN of the Retirement Villages Act 1986 says the operator must prepare a capital maintenance plan. There was no phase in for this part of the Act, and it applies whatever year your residents signed their contracts.

We have built these plans for three regional villages with Kairos Strategies, working from the authorised text of the Act and the Regulations. This guide sets out what the law asks for, what it leaves to you, and what we learned along the way. It is general information, not legal advice.

What does section 38BN require?

The duty itself is one sentence.

Subject to section 38BO, the operator of a retirement village must prepare a capital maintenance plan for the capital maintenance of items of capital for which the operator is responsible.
Retirement Villages Act 1986 (Vic) s 38BN(1)

Section 38BN(2) then lists six things the plan must set out:

That last line matters more than it looks. Regulation 52 of the Retirement Villages Regulations 2026 says what the prescribed information is.

For the purposes of section 38BN(2)(f) of the Act, the prescribed information is any information the operator relied on in preparing the capital maintenance plan.
Retirement Villages Regulations 2026 (Vic) reg 52

In plain terms, the evidence behind the plan is part of the plan. A plan built on a desktop estimate has to say so.

The provisions sit in Division 1B of Part 6 of the Act, inserted by the Retirement Villages Amendment Act 2025. You can read the current version on the Victorian legislation website, and Consumer Affairs Victoria publishes a summary of the retirement village reforms for operators.

Which villages does it apply to?

The duty sits with the operator of a retirement village. The Consumer Affairs Victoria register held 437 registered villages in August 2026.

The Division carries its own exemption. Under section 38BO, no plan is required where an owners corporation exists for the village land and that owners corporation holds both a maintenance plan and a maintenance fund under the Owners Corporations Act 2006. Both are needed. An owners corporation on its own does not exempt the operator.

Two practical points come up early.

What counts as an item of capital?

More than buildings. Section 38BG defines an item of capital as a building or structure in the village, plant, machinery or equipment used in its operation, a part of its infrastructure, or anything prescribed. Regulation 48 prescribes more, including walls, cladding, floors, ceilings and roofs, fences and gates, garage doors and car ports, air conditioning, roads and pathways within the village, solar panels and electric vehicle chargers.

The operator is responsible for every item of capital in the village except those owned by a resident, those in or on common property, and prescribed classes. The prescribed classes are items a resident bought and installed for private use, and roads and pathways that belong to a council or another government authority.

There is a turnover mechanic worth knowing. Under regulation 49(2), an item a resident installed stops being excluded once that resident vacates. The operator's asset base grows a little every time a unit changes hands.

Who pays: capital maintenance or capital replacement?

This is where the money is. The Act draws a line between maintaining an item and replacing it, and the line decides who funds the work.

Capital maintenance may be funded from maintenance charges or from the capital maintenance fund, if the village has one. Capital replacement is different.

The operator of a retirement village must bear the cost of capital replacement in respect of an item of capital for which the operator is responsible.
Retirement Villages Act 1986 (Vic) s 38BK(2)

Section 38BK(3) also bars three things from being funded out of the charges or the fund: building new stock, depreciation, and the renovation of vacant premises. So a depreciation schedule is not a capital maintenance plan, and refurbishing a unit between residents is not a cost the maintenance charge can carry.

The Regulations show how fine the line can be. Replacing components of a heating, cooling or hot water system is capital maintenance under regulation 46(g), provided entire systems are not being replaced. Replace a compressor and the charges can fund it. Replace the whole system and the operator pays.

No fine attaches to section 38BN. The exposure is financial. The operator carries replacement, and under section 38BF the operator must make good any deficit.

How does the plan reach residents?

Through the annual meeting. Section 34(4) requires the operator to table a copy of the plan at the annual meeting and to present a report on how the plan was implemented during the previous financial year. Section 34(5) requires the minutes of that meeting to incorporate a copy of the plan.

So the plan becomes part of the village's permanent record, and each year's plan sits beside the last. Write it for that room. The readers are residents, not engineers.

What does the Act leave to the operator?

Quite a lot, and this is the part that surprised us most. The Act says what the plan must contain. It does not say how to decide any of the following.

These settings are not small. Working from the same audit data, different reasonable choices produced ten year totals for a single village that were several times apart. That is why each setting belongs in a written decision register, agreed with the operator, and stated in the plan as information relied on.

There is also a limit on how far work can be put off.

The operator of a retirement village must carry out the maintenance of, or replace, an item of capital for which the operator is responsible within a reasonable time after becoming aware of the need for the maintenance or replacement of the item.
Retirement Villages Act 1986 (Vic) s 38BH(3)

A recorded poor condition is a record of awareness. An operator can run an asset past its design life. It cannot sit on a need it knows about.

What did we learn on three regional villages?

The three villages belong to a not for profit operator in regional Victoria. Together they hold about 31,000 items of capital with a replacement value of about $60 million. A few lessons carried across all three.

The pathway: audit, plan, refresh

Nothing in the Act requires the plan to be updated on a set cycle. The annual meeting does that work, because the plan is tabled every year with a report on how it was implemented.

The full service is described on our capital maintenance plans for Victorian retirement villages page. If the audit is the part you need first, our asset condition assessment service explains how we think about condition data.

Frequently asked questions

When did the capital maintenance plan obligation start in Victoria?

On 1 May 2026. The provisions were inserted by the Retirement Villages Amendment Act 2025.

Is there a fine for not having a capital maintenance plan?

No fine attaches to section 38BN. The consequences are financial and public. The operator bears the cost of capital replacement, must make good any deficit, and tables the plan in front of residents every year.

Does the plan have to be prepared by a quantity surveyor?

No. Neither the Victorian Act nor the Regulations prescribes a qualification for whoever prepares the plan. What the Regulations do require is that the information relied on is disclosed, so the method has to hold up when read.

Does an owners corporation exempt the village?

Only if the owners corporation holds both a maintenance plan and a maintenance fund under the Owners Corporations Act 2006. One without the other does not meet section 38BO.

Is residential aged care covered?

No. Residential aged care is not a retirement village and sits outside the plan, even when it shares a site with one.

Do the same rules apply in other states?

No. New South Wales, Queensland and South Australia have their own regimes with different requirements. Everything in this guide is about Victoria.

About SAS Asset Management

SAS Asset Management is one of only three IAM Endorsed Assessors headquartered in Australia. That endorsement covers the assessment of asset management systems against ISO 55001. It does not extend to capital maintenance plans, and Victoria prescribes no accreditation for preparing one.

We provide advanced analytics, expert asset management services and maturity assessments to help asset owners realise their value.

If you operate a Victorian village and want to talk through where your plan stands, get in touch. Happy to walk you through what we built and how it was received.