A development business that sells Auckland units where under-55-year-olds are barred says it is challenging traditional retirement village models. However, a government watchdog has cautioned buyers to beware of what they are purchasing.
Grant Johnstone, chief executive of Bloom Living, said it had created nearly 200 new Auckland units since it was formed in 2010, selling them to people aged 55-plus.
Instead of the traditional retirement village model where people own only a contract to live in a property, he said, Bloom sold titles outright. He said that gave owners the ability to make a capital gain, and have more control over their places.
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"Instead of an occupation rights agreement, we sell properties," Johnstone said. He cited units Bloom had built at 100-104 Edinburgh St in Pukekohe, 4a Auburn St Takapuna and 128 George St Papatoetoe. It is advertising new places at Henderson's 18 Lincoln Rd and 21 Swanson Rd, and Manurewa's 20 Alfriston Rd.
Most units were in the $550,000-$640,000 range, he said and the 55-plus age limit would be enforced by bodies corporate in each block.
Many of the traditional villages impose an age limit of 75-plus.
Murray Young lives at Bloom Swanson with his wife Margaret. He said they sold their home in Glendene but did not like licences to occupy, nor missing out on capital gain, as with traditional retirement villages. As well, the weekly body corporate fee was only $80, he said.
"Bloom Living apartments are all freehold," said Young. "You own it and all the capital gain is yours when the apartment is sold and you only pay your real estate agent their commission. Pets are permitted and you can have family and friends stay for a certain length of time."
Bloom says its apartments are designed exclusively for those aged 55 years and over, "so you're connected to like-minded neighbours as well as the wider community."
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NZX-listed retirement businesses Ryman Healthcare, Metlifecare, Arvida, Oceania and Summerset do not sell titles to properties but sell only occupation rights agreements, meaning people don't own their places outright.
In those villages, buyers also agree to pay deferred management fees of 25-30 per cent once they leave the village. Often that is when they die, so their children or other beneficiaries receive considerably less than the amount their parents paid.
As well as that fee, residents in those villages are not entitled to any capital gains, so hundreds of thousands of dollars can be foregone depending on how long people have lived at a village.
Johnstone said that with about 40,000 New Zealanders now in traditional-model retirement villages, it was time for alternative options.
"We decided not to have occupation rights agreements but to sell titles to properties. The traditional retirement village can suit people with a lot of money but we were keen to build in more working-class areas," Johnstone said.
Troy Churton, who is in charge of retirement villages for the Commission for Financial Capability, said he knew of Bloom's model but expressed reservations.
"I include it in public information seminars as an example of a lifestyle subdivision that markets itself in a similar way to retirement villages but is really a form of unit title development.
"People who buy into Bloom get the standard rights they would have as unit title owners, perhaps with some unique body corporate restrictions such as a minimum age of owners. I use it to emphasise to people that they need to understand what they may be buying before they get too attracted to what they see," he said.
Bloom apartment buyers did not enjoy the protection of the Retirement Villages Act, he stressed.
"We have previously referred Bloom to the RV Registrar to investigate whether it fulfils the definition of the retirement village and therefore should be registered as such. The Registrar has determined that Bloom meets the exception," Churton said, citing an exemption from the act.
"My view is that the definition of a retirement village is being usurped based on some debatable interpretations of the extent of services or facilities being provided".
But Johnstone said Bloom had also had legal advice that it did not fall under the Retirement Villages Act.
"The operation of each development is governed by the Unit Titles Act and the body corporate rules," Johnstone said.
Graham Wilkinson, president of the Retirement Villages Association and founder/owner of the four-village national Generus Group, said he welcomed new models and variations to provide options.
But he said people bought into traditional villages for security "plus many other reasons like downsizing, getting comprehensive facilities, eliminating maintenance, releasing funds from a larger house, etc. We look after people for the rest of their natural lives. We remove the worry and give peace of mind with likeminded individuals and we take care of all issues."
Traditional villages catered mainly for 65-75-year-olds and older, compared to the Bloom model targeting over-55-year-olds, he said.
"[Traditional] village costs were the rights agreement, weekly fees, and the deferred management fee. The first two are almost without exception excellent value and considerably cheaper than other options where the developer of the unit only makes a margin by selling the product and there are ongoing body corporate costs.
"The [deferred fee] is a cost that the unit title owner does not have, but that pays for facilities, usually guarantees a high-quality continuum of care and also gives the return to the owner," Wilkinson said.
"At the time this is collected, the resident has usually passed away. The children may have the estate they receive reduced but they have knowledge of the security and happiness of their parents and are grateful. Essentially it is pay now or pay later, and with villages you pay later."
Wilkinson mentioned the leaky building issue, saying these problems blighted apartments and could cost owners millions, yet in a traditional village model the village owner had to fix things at no cost to residents.
John Collyns, the association's executive director, said the organisation supported choice but registered retirement villages were increasingly popular, with 80 to 90 people moving into one each week.
They provided a no-hassle lifestyle with no need to maintain and upkeep homes, or pay rates, insurance and water levies, Collyns said.
He argued that research showed people were far better off choosing a retirement village over an own-your-own unit because villages were generally cheaper and less costly to live in, leaving residents with more money left over after the move.
"This means people can do things in their retirement they'd only dreamt of while stuck in their own home. Retirement villages also provide flexibility as residents can receive care should that be needed," Collyns said.
People going to unregistered village should consider the risks, he said. Retirement villages were subject to a world-leading regulatory framework with considerable oversight, safeguards, transparency and consumer protection for residents, he argued.
A statutory supervisor holds a first charge over the land title in all villages, he said, intending residents must receive independent legal advice and a cooling-off periods applied.
"The act, regulations and code of practice provide a comprehensive and effective resident-focused consumer protection regime," Collyns said.