Retirement commissioner Jane Wrightson urges urgent retirement village sector review

Major changes are needed for retirement village law. Photo / supplied

An urgent review of the retirement village sector is needed for fairness to about 45,000 older New Zealanders living in the fast-expanding high-profit sector who are neither owners nor tenants of their homes and denied a strong consumer voice.

Jane Wrightson, retirement commissioner, today released "Retirement villages legislative framework: assessment and options for change" as a summary of 3254 submissions and recommendations to the multi-billion sector.

Operators taking ages to resell the property after a death, no shared capital gains and weekly fees continuing after death or hospital admission were the most widely discussed issues, she said.

Wrightson, Consumer NZ, the Retirement Village Residents Association, the Law Society and many others are making louder calls for a review of the Retirement Villages Act 2003.

"Residents are neither owners nor tenants and their consumer protections are limited. It is therefore important that fit-for-purpose legislative protections are in place," she said.

Peter Carr, Retirement Village Residents Association president, said such a powerful call for change "makes a mockery of the industry operator's view that 96 per cent of retirement village residents are living in an aura of violins and kumbaya.

"The clear message from the retirement commissioner - an entirely independent observer - that major material change to the Retirement Villages Act and associated regulation and codes is well overdue, aligns exactly with the aims and oft-repeated objectives of the association," Carr said.

Peter Carr of the Retirement Village Residents Association. Photo / Supplied

"This should be a well-balanced industry, where elderly people in the twilight of their lives are [not] exploited by heavy-handed operators intent on huge profits, where entirely unfair financial practices should be questioned, where in some cases elderly mainly single ladies are commercially exploited layering them with undesired stress. [This] is an oft-repeated sad reality," Carr said.

The majority of retirement village residents were women, the average age was 81.5 years and "I know of many women who are in this position but they won't speak out for fear of retribution from the management and fellow residents. They're being commercially exploited by losing up to 30 per cent of their money, getting no capital gain and unfortunately no one is breaking the law. It's just the law is an ass," Carr said.

Submissions to Wrightson's office said occupation rights agreements were non-negotiable, contracts were confusing, facilities were promised but failed to materialise. Agreements should be standardised, like residential tenancy or property sale agreements.

Agents selling retirement village agreements aren't forced to adhere to real estate agent standards. Who pays for repairs and maintenance and the loss of 20 to 30 per cent of the purchase price were other concerns.

"Almost everyone supports an examination of the system including statutory supervisors and the Law Society," Wrightson said.

Retirement Commissioner Jane Wrightson. Photo / Michael Craig

Late last year, the Commission for Financial Capability released a paper raising alarm about the resale process, weekly fees charged after a resident dies or is moved, flaws in an overly complicated complaints system, confusing documentation, and the tricky interface between village and care facilities.

"These issues are important because it is difficult to leave a village once contracts are signed," Wrightson said.

Almost all individual submitters supported a full review of the regulatory framework, Wrightson said.

Operators via lobby group the Retirement Villages Association oppose major regulatory review, saying only some areas may need improvement and they're best to handle it, not an external state authority.

John Collyns, association chief executive, said today the call for an urgent law review was unnecessary and excessive. Wrightson should instead focus her efforts on working with the industry to implement improvements already underway

Representatives of Ryman Healthcare, Metlifecare, Oceania, Arvida and Summerset are association members and multi-million dollar businesses which are extremely profitable, due to existing models which deprive the elderly of any capital gain, keep up to a third of their money and deny them a powerful consumer voice.

The document out today said: "There was strong support for reaching some arrangement to share the capital gain between the resident and the operator."

But operators say if they were forced to share, it would endanger their financial models and Collyns said today change was already being planned.

Wrightson described the operators' reform suggestions as "tinkering around the edges".

"The wide-ranging concerns expressed in the individual submissions, and those of other stakeholders, suggest that focussing only on these limited areas is not sufficient to ensure a fair and balanced regulatory environment," she said.

Poto Williams, Associate Housing Minister responsible for the retirement village sector, told the Herald last month she also wants to see changes.

There are some changes the industry could start to make themselves to strengthen the complaints processes and review contracts to ensure residents are fairly treated, Williams told the Herald.

It was up to owner/operators of New Zealand's dozens of villages to act because the Government had "no immediate plans" to reform the law, she said last month.

Wrightson doubts operators will go anywhere near far enough.

Military brought in at Ryman in Australia to protect residents. Photo / Ryman Healthcare

"The sector is growing and if the Government does not review the regulatory framework now, New Zealand runs the risk of ending up with a weak framework that does not properly protect older consumers and their families," Wrightson said.

The commission has offered to assist in writing review terms of reference and supporting the Ministry of Housing and Urban Development.

"We will await a Government response and hope that it will agree to a formal review. I know officials say there's too much work on for the Government already and it is not urgent but we say it's going to get worse, not better, so we think they should do it," Wrightson said.

Retirement village giants have vowed "improvements" to the sector after Williams, the commission and Consumer NZ called for change.

Graham Wilkinson, Retirement Village Association president, last month announced changes to the complaints system and the length of payback time.

At the association's national conference in Auckland, he cited providing residents with a stronger voice, strengthening the complaints process and working with the commission to monitor re-licensing times.