Retirement village residents and advocacy groups are calling for significantly tougher legal protections to ensure that funds are returned more quickly to former residents or their estates after they leave a facility or pass away.
Under current legislation, there is no mandatory timeframe requiring retirement village operators to issue repayments once a unit is vacated. In most instances, these repayments are only made after the villa has been resold.
The issue has gained urgency as Parliament considers changes to the Retirement Villages Act. The government’s proposed reforms would introduce a requirement for operators to repay residents or estates within 12 months of a unit being vacated. The proposed bill would:
- Require interest to be paid on outstanding amounts if a unit remains unsold after six months.
- Immediately stop weekly fees and deductions after a resident leaves or dies.
- Establish a hardship process to allow earlier access to funds in specific circumstances.
However, the proposed 12-month repayment rule would only apply to new residents entering villages after the law changes take effect. Brian Peat, National president of the Retirement Village Residents Association, warned that this means approximately 56,000 current residents across the country “will not see that benefit at all.” Peat argued that the repayment timeframe should be no more than three or four months and must apply to existing residents.
The financial impact on residents can be severe. Brian Williams, a resident at Bayswater Metlifecare Tauranga, described the current system as “kind of piracy,” noting that residents may lose 30% of their money over several years. He stated that while operators may resell units at higher prices, they often hold onto the resident’s capital until they choose to release it.
In response to the government’s proposal, Labour spokesperson for seniors Ingrid Leary is backing a member’s bill that would demand stricter terms: capital repayment within three months, with 10% returned within five working days. Leary rejected claims that such protections would destabilize the sector, pointing to similar reforms in Australia where she stated there is “no evidence that any retirement villages in Australia have folded as a result of the law change.”
This position is supported by Consumer NZ. Chief executive Jon Duffy stated that the government has “got it wrong” and emphasized the need for the government to understand the “strength of feeling around bringing fairness to the retirement village industry.”
Conversely, the industry has raised concerns about the viability of these mandates. Michelle Palmer, executive director of the Retirement Village Association, highlighted the “double whammy” of paying interest at six months and full repayment at 12 months for units that take time to resell. Palmer noted that the average time to resell a unit is between six and eight months and warned that shortening the period further or applying rules retrospectively could “put operators out of business” and close several villages immediately.
With more than 450 retirement villages operating nationwide and demand growing as the population ages, the legislation is now progressing through the select committee stage. Brian Peat indicated that residents intend to keep pressure on politicians, stating, “It’ll be an election issue from us, believe me.”
As the bill moves through Parliament, the final legislation may determine whether the sector faces significant financial restructuring or if residents receive the expedited access to their capital they are seeking.
