Retirement village contracts, complaints system need reform: Minister Poto Williams

Poto Williams: clearer contracts, better complaints system in retirement villages needed. Photo / Dean Purcell

A Government minister wants a better complaints system so residents can air grievances and clearer contracts in the fast-growing multibillion-dollar retirement village sector.

Poto Williams, Associate Minister of Housing (Public Housing), says these aspects should be changed.

"There are some changes the industry could start to make themselves around strengthening the complaints processes and reviewing 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.

Williams was commenting before the release of a report on submissions on a call for major changes in a whitepaper from the Commission For Financial Capability.

The commission received 3000 submissions when it said many aspects of villages should change to make it fairer for residents and beneficiaries of family estates.

Villages can keep charging weekly fees for months after residents die. They are not forced to repay a family estate or beneficiaries the money paid for a unit or bed once their relative has died. Nor are there any specific time constraints on these two aspects, which comes as a shock to some families, grieving after a relative's death.

Williams says the industry should move further to self-regulate.

Around June or July, Retirement Commissioner Jane Wrightson will release a report on the views of operators, residents, the industry and stakeholders including lawyers and statutory supervisors.

Recommendations for the Government to overhaul the Retirement Villages Act could be in Wrightson's report but that's not certain.

John Collyns, executive director of the Retirement Villages Association, wants no change. Photo / File

John Collyns, executive director of the Retirement Villages Association - the lobby group for owner/operators - is holding a firm line against any reforms.

"No, we don't want to change a thing but we recognise there are things that the industry could implement in terms of some best practice around, for example, how long to relicense or sell a unit.

"Rather than a fixed time, we could work with the operators to devise some best practice and the industry would put in place its own time guidelines," Collyns said.

He challenged criticism that contracts are unclear or that people are being ripped off.

Troy Churton, previously the retirement lead at the commission, said the contracts "are so complicated we found that even some lawyers who work in the field could not understand them".

Collyns said surveys of residents show most are happy with the status quo.

The Commission for Financial Capability and Consumer NZ made loud calls late last year for overhaul of the retirement sector.

Consultants JLL estimated last year about 45,000 New Zealanders live in retirement villages. Its latest report is due out in the next few weeks and could show thousands more people aged 75-plus have moved into villages in the past year as the sector expands fast.

Troy Churton. Photo / Ben Fraser

Williams said she knew how much was at stake.

"I am aware that there is a growing number of older New Zealanders are moving into retirement villages. The Commission for Financial Capability - Te Ara Ahunga Ora and Consumer NZ are raising some important issues, particularly around the fairness of prevailing industry practices and whether residents' rights and interests are adequately protected," Williams said.

"Retirement village residents often part with significant money in order to enter a village, and it is important that the regulatory regime strikes the right balance for residents and operators, which needs to be based on a sustainable model for the sector," Williams said.

Asked about the in-depth reports by these entities calling for major change, she said: "I welcome the reports and the useful insights they contain about the sector. Te Tūāpapa Kura Kāinga – Ministry of Housing and Urban Development are aware of them for informing any future advice."

Asked what plans, if any, she has to move on the commission and Consumer reports to strengthen the Retirement Villages Act, Williams said: "At this stage there are no immediate plans to review the Act, although I acknowledge that the Act is due for review and will work towards this when we can."

Consumer NZ chief executive Jon Duffy. Photo / Supplied

Jon Duffy, chief executive at Consumer NZ, said last year a review of contracts found terms which unfairly favoured villages and risked costing residents dearly.

"Retirement villages promise the good life in your golden years. However, the agreements consumers must sign before they move into a village can have a nasty financial sting. Some also risk breaching consumer law," Duffy said.

Terms which made residents responsible for the costs of maintaining and repairing items in their unit - even though they didn't own them - were one worry.

The review examined contracts from Arvida, Bupa, Metlifecare, Oceania Healthcare, Ryman Healthcare and Summerset.

Most retirement villages offer a licence to occupy, which gives the resident the right to live in their unit, but no ownership rights. Despite this, some contracts made the resident liable for repairing the operator's chattels, Duffy said.

Jessica Wilson, Consumer NZ research head, said Metlifecare had a wide-ranging clause in its contracts which gave residents only a month after agreements began to advise the company of any repairs needed.

After then, the resident was required to meet all costs, including paying for repairs to the unit's stove, garage doors, plumbing and electrical fittings, she said.

"In our view, these terms conflict with residents' rights under the Consumer Guarantees Act to expect goods and services of a reasonable standard. If the oven in your unit fails, the village should wear the repair cost," she said.