Consumer NZ on Retirement villages

Caitlin Cherry – Head of Content at Consumer NZ

Over the past few years, Consumer NZ has undertaken several investigations into different aspects of retirement villages – from impenetrable contracts to care failures and villages not providing promised advanced care services.

More recently, we told the story of an 80-year-old woman who had to leave her unit at a boutique village after her husband was diagnosed with terminal cancer. A year on, her unit had not sold –leaving her, by then a widow, in financial limbo.

This is unacceptable, in our view. We agree with the RVRA that the Retirement Villages Act and Code of Practice need to be urgently reviewed, including requiring a village to return capital to departing residents within 28 days of exit.

We do know that many residents do get a lot out of retirement village life – in particular the freedom from home maintenance, the community and activities, and the safety and security villages can offer. But when things don’t go so well, it is the residents who suffer.

In August we appeared before Parliament’s Social Services and Community Committee, in support of the RVRA’s petition calling on the Government to address the imbalance of power between retirement village residents and operators. There is a fair bit of pushback from the Retirement Villages Association but we are hopeful that the Government will act to make the system fairer for all.

If you support the work we are doing with the RVR to help retirement village residents and all the other work we do to benefit consumers in New Zealand, we’d greatly appreciate your help with a donation. Just go to www.consumer.org.nz

Fish hooks: What to look out for.

Who must inform a prospective resident on the effects of moving into a village? Their lawyer.

So, to help lawyers better understand the sector and what residents ‘wish’ they’d been told, Peter Carr, our past RVR President, Nigel Matthews (RVR CE), and Troy Churton, Independent Consultant have been speaking to New Zealand Law Society members in a recent ‘professional development’ webinar.

Much of the advice offered is thanks to the stories and case studies shared by RVResident membersand most of the concerns from residents relate to exit circumstances and processes.

A 2022 ‘inhouse’ survey of RVResidents members identified the 5 most important issues;

1. Weekly fees stopping on exit.

2. A mandated time frame for residents to receive their capital back (less the DMF)

3. No share in the capital gain

4. Repairs and maintenance of operators chattels

5. Easy to follow ORA’s

“We are recommending that lawyers: 1. Take considerable time and care to satisfy themselves that the clients genuinely appreciate the exit terms.

2. Counsel their clients to consider how the client’s appreciation of the exit terms of the ORA may change over time, meaning the client may feel they have very little choice or rights in future years.” says Peter, and

3. That prospective residents include the person who will hold their enduring power of attorney at the lawyers meeting. This will ensure that close family members appreciate the whole picture from the start.

Case studies, such as ‘Mary’, widowed, aged 80 waiting for her money nearly a year after giving notice and accruing an extra $65,000 in DMF and weekly fees - while not even living in the unit, have shocked a number of people spoken to*.

Other questions explored in the seminar included;

• If I want to get out early - the effect of the DMF over time?

• Has the market shifted? Will I be able to buy back into the housing market?

• When will I get my money back after I leave?

• Can I get a mortgage or loan if I need to?

• Effect of the estate / beneficiaries to the estate?

• Refurbishment and repairs - who pays?

• The extent of support/advocacy services for residents during their tenure if complaints or issues arise being quite limited.

• Many residents wish they had a better understanding of how to make a formal complaint or use the complaint and dispute panel processes to influence a better outcome for the resident.

• Bringing in a pet. Usually operators impose a limit on numbers of pets and non-replacement of pet clauses are common.

• If I make some changes to the unit do I have to return it back to its original state (at my cost) prior to exit?

• Can I negotiate an ORA if a spouse is under the minimum entry age?

• What are my rights if the operator lifts the entry age to only allow older people?

A similar seminar was also presented to Financial Advisers earlier in the year by Nigel and Peter with very positive feedback. “We see this as an important opportunity to upskill the people that advise New Zealanders looking to move into a village.”

* At the time of going to print, “Mary” had still not received her money back after giving notice 14 months ago. This is one of the unfair outcomes of most ORA’s and why RVResidents have petitioned the government for change.