Weekly fees have been abolished on empty retirement-village units in a big national chain, leaving many elderly people and their estates potentially much wealthier.
A lobby group representing inhabitants has welcomed the move, saying other villages should fall in line.
The 24-village Metlifecare wrote to residents last month saying fees would end once they left their places, whereas previously residents were liable for up to half a year's fees.
More than 5000 residents have licenses to occupy 4230 Metlifecare independent living units and serviced apartments. After three years, the business takes 30 per cent of what residents pay to buy in, under its deferred management fee. A minimum age limit of 70 is set for Metlifecare entry.
But it could also charge weekly fees on empty places when residents either died, moved to apartments or hospital beds in its network.
Metlifecare chief executive Glen Sowry wrote to residents: "I wanted to personally let you know about an important change that Metlifecare is making to its commercial offering ... the village fee payable for the above unit will cease from the date the unit was vacated."
Asked why the company had changed its policy, Sowry told the Herald: "We have reviewed all aspects of our commercial offering and formed the view that this change was appropriate to ensure competitiveness and value to prospective residents. We have also implemented a new offer which is an industry first whereby on all new Occupation Right Agreement's entered into post February 26, residents or their families will be able to access $20,000 of their capital sum on vacation of their unit."
The change applied to all Metlifecare places, he said.
"Fees were previously charged up until six months post vacation or until the unit was re-sold and settled, whichever was sooner," he said.
Colin Porter, a member of the executive of Retirement Villages Residents Association and chairman of the Auckland region, welcomed the change.
Fees should cease when a unit is vacated
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"Under the code, they can carry on for six months, then be reduced by 50 per cent. That's part of the code. We don't think it's fair. We applaud Metlifecare for the change its made," Porter said.
John Collyns, Retirement Villages Association executive director, said no law change prompted the move.
Whether a softening market in demand from new residents and a flat housing market is taking a toll is uncertain.
"Some villages may respond to market demand and offer better terms than the minimum in the code of practice and act. I'm not aware of the number of those doing so," Collyns said.
Owners who continue to take the fees are not doing anything wrong, he said. The code of practice allowed operators to continue to charge weekly fee until the unit's agreement was resold but also requires those fees to be reduced by 50 per cent if the unit remains unsold after six months, he said.
"In response to market demand, a number of operators either cease charging the fees once the unit is vacated, or offer terms that are better than those in the code. The ability to continue to charge the weekly fee is essential for small resident-funded villages where the cost of operation is met by the residents collectively," Collyns said.
Those weekly fees cover the village's fixed costs including rates, insurance, compliance with the act, village maintenance, costs relating to the common areas, staff salaries and any village van.
"The national average weekly fee is $121.50. This has risen by $1.50 over the last five years," he said. Fees for an personal costs like care, meals, laundry, medicine and administration must cease when the resident moves out, Collyns said.
Graham Wilkinson, association president, said major operators had stopped charging fees promptly.
"Our company stops fees on death or vacation of the unit," he said referring to his business Generus Living Group. Some of the smaller operators were not as "responsive" in terms of ceasing fees on vacation, Wilkinson said.
"But this is changing and the consumer is becoming more educated," Wilkinson said.
In 2014, an executor of an estate said more than $200,000 had been lost on her late mother's Remuera village apartment.
Read more: Estate takes bit hit after sale delay
Sue Moody said that it took more than two years for Metlifecare to sell the one-bedroom apartment at 7 Saint Vincent, yet the estate had to pay $1100.65 a month in fees for the empty place for the first six months it was empty.
The estate was also powerless to market or advertise it to hurry any sale, Moody said.