Retirement village residents are calling for tougher legal protections, arguing village operators should be forced to return money to former residents — or their estates — much sooner after they leave or die.
The push comes as Parliament considers changes to the Retirement Villages Act. Under current law, there is no mandatory timeframe requiring retirement village operators to repay residents or their estates after a unit is vacated.
In most cases, repayment is only made once the villa has been resold.
National president of the Retirement Village Residents Association Brian Peat has spent the past two weeks travelling around the country speaking to village residents about the proposed reforms.
“I know what residents are saying. The government needs to start to listen,” he told Q+A.
The government's proposed changes to the Retirement Villages Act would require operators to repay residents or estates within 12 months of a unit being vacated.
If the unit remained unsold after six months, interest would need to be paid on the outstanding amount.
The bill would also stop weekly fees and deductions immediately after a resident leaves or dies, and would establish a hardship process allowing earlier access to funds in some circumstances.
Peat said the association supported the reform but still believed the proposed repayment period was too long.
“The repayment timeframe has to be no more than three months, four months, and it must apply to existing residents,” he said.
Under the current proposal, the 12-month repayment rule would only apply to new residents entering villages after the law changes come into force.
“That 56,000 people across the country in retirement villages now will not see that benefit at all,” he said.
Bayswater Metlifecare Tauranga resident Brian Williams said many families were shocked to discover how the system worked.
“Well, it’s kind of piracy really, isn’t it?” he said.
“We come in here, and this is typical for retirement villages, after several years you’ve lost 30% of your money, which might be just about all the money you had when you sold a house and came in. That's fine, because you get looked after.
“But when you go out and the capital gain comes in, the operator resells it at a much higher price, but they hold on to your money, your capital, until they just want to release it.”
Retirement Village Association executive director Michelle Palmer said operators also had concerns about the proposed legislation.
“The issue is really around the double whammy of the interest payable at six months and full repayment required at 12 months for units that have taken time to resale,” she said.
Palmer said the average time taken to resell a retirement village unit was between six and eight months.
She warned shortening the repayment period further, or applying the rules retrospectively, could place significant financial strain on operators.
“That would put operators out of business,” Palmer said.
“It would close a number of villages right here, right now, if they had to suddenly come up with all of those changes and money within three months.”
'We think they've got it wrong'
Labour spokesperson for seniors Ingrid Leary is backing stronger reforms through a member’s bill which would require operators to repay residents’ capital within three months, with 10% returned within five working days.
She rejected claims stronger protections would destabilise the sector, pointing to similar reforms in Australia.
"Operators might plead poverty, and when many states in Australia change their laws the same arguments were used," she said.
“But there’s no evidence that any retirement villages in Australia have folded as a result of the law change."
Her bill was supported by Consumer NZ, with chief executive Jon Duffy saying it was important for the government understood the "strength of feeling around bringing fairness to the retirement village industry".
"The government's got a bill progressing through into the select committee stage that has provisions in it around restricting repayment periods for people leaving retirement villages," Duffy said.
"We think they've got it wrong, and we want the government to understand that people feel strongly that those repayment periods should be fair."
With more than 450 retirement villages operating nationwide and demand continuing to grow as New Zealand’s population ages. Peat said residents were determined to keep pressure on politicians as the bill progresses through Parliament.
“We’ll be very vocal over the next few months,” he said.
“It’ll be an election issue from us, believe me.”
Q+A with Jack Tame is made with the support of NZ on Air
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