Retirement village repayments would be capped at nine months and require operators to make an upfront payment to departing residents, under proposed Government reforms.
Associate Housing Minister Tama Potaka unveiled a revised reform package for the sector today, saying feedback from residents and their families had prompted the Government to go further than previously planned.
Under the plan, retirement village operators would be required to repay former residents or their estates within a maximum of nine months, rather than the 12-month cap previously signalled by the Government.
Residents would also receive 10% of their net termination proceeds within four weeks of leaving a village, replacing an earlier proposal that would have required operators to pay interest after six months.
"We have listened carefully to older Kiwis and their whānau, and we are acting," Potaka said.
"We're strengthening it because older Kiwis told us the balance needed to shift further towards residents."
The minister said a resident buying an average-priced retirement village villa in 2028/29 could expect the upfront payment to be about $60,000.
"That is real money when someone is moving into aged care or another home and is facing immediate costs," he said.
Labour is campaigning on a more ambitious proposal, promising to require retirement villages to repay departing residents within three months and pass legislation within its first 100 days in government if elected.
Potaka said the Government had considered a three-month repayment deadline but ruled it out after modelling suggested operators would need access to between $3.2 billion and $4.1 billion in additional capital.
He said those costs could add up to $118,000 to the cost of entering a retirement village if passed on to residents.
"I looked closely at the three-month option, but the evidence is clear. It could get one person paid faster by making the next pay considerably more," Potaka said.
"I will not make a promise that sounds good but risks unnecessary higher costs, reduced services or fewer choices for older Kiwis."
The reforms would be enacted through a Retirement Villages Amendment Bill, which the Government says it would introduce in the next parliamentary term.
If passed, the new repayment requirements would apply to occupation right agreements signed one year after the legislation comes into force.
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