Have your say on retirement villages

Got concerns about how retirement villages operate in New Zealand? Then now is the time to have your say.

For just over one more week, the Commission for Financial Capability (CFFC) is accepting submissions on its discussion paper Retirement Villages Legislative Framework: Assessment and Options for Change 2020. The paper recommends reviewing the current framework saying there are consumer issues with it, which reflect the way the framework favours the “commercial imperatives” of village operators.

More than 45,000 New Zealanders live in retirement villages, with this number growing by 100 people per week. The discussion paper suggests the current resident-funded business model will need to change in the future, to cater for expectations of larger numbers of retirees requiring financial assistance from operators, and more people reaching age 65 with a mortgage or renting. This means less people will be able to pay the large sums needed to purchase a retirement village ‘license’ to occupy a unit, it says.

The discussion paper comes as a recent review by Consumer found retirement village contracts favoured the operators.

The Retirement Villages Association holds concerns about some of the options raised in the paper saying our regulatory regime for retirement villages is world-leading and allows considerable flexibility of choice for potential residents. It believes it is crucial this range of choice is preserved.

Recommendations for review in the CFFC discussion paper include:

• considering options to improve the resale and buy-back process (including things like sharing any capital gains between the resident and the village operator and introducing guaranteed timeframes for the likes of unit buy-backs);
• restricting the charging of weekly fees after a resident vacates a unit;
• reviewing the Retirement Villages Code of Practice 2008 to establish best practise and balance operator control and residents’ rights;
• streamlining and formalising the complaints process;
• changes to better support residents’ welfare;
• analysing future trends, considering if consumer protections are strong enough and investigating whether different models should be encouraged;
• simplifying disclosure statements and making them more accessible; and
• considering whether the definition of a retirement village needs modifying to include a wider range of lifestyle developments and exploring whether the presence of care changes a retirement village from a housing proposition to a health proposition.

Retirement Commissioner Jane Wrightson says one of her statutory obligations under the Retirement Villages Act 2003 is to monitor the current framework’s effectiveness to ensure it is fair and balanced for both the industry and consumers.

“The intention of this paper is to describe the environment, discuss core issues, and start a conversation between industry, residents and government about if and where change is desirable,” she says.

Retirement Villages Association executive director John Collyns is concerned about some of the options raised in the paper.

“We recognise this is only a discussion paper and we are looking forward to working constructively and in good faith with the CFFC to discuss the options raised,” he says.

“However, we have identified a number of inaccurate statement and incorrect assumptions in the White Paper, and we are concerned the document does not reflect the reality of New Zealand’s retirement villages industry today.”

Feedback on the discussion paper can be made here until 26 February 2021.