Wide-sweeping changes are recommended to the multi-billion dollar retirement sector, home to a "vulnerable" population estimated at 43,000 people.
Retirement Commissioner Jane Wrightson's office today released a discussion paper on the Retirement Villages Act 2003, its regulations and code of practice, noting lack of significant reform in 17 years.
Guaranteed retirement unit buyback periods when residents move or die, limits to how long weekly fees are charged when people leave, more voice for residents and a consumer protection probe are mooted.
The Commission for Financial Capability document recommends stronger protection for the population which real estate agents and property consultants JLL estimate number at least 45,000 New Zealanders, with a further 12,000 places now under construction.
But the head of an industry body which represents village owner/operators rejected the recommendations and said the whitepaper contains inaccuracies.
Graham Wilkinson - Retirement Village Association president and the managing director of national village chain Generus Living Group - questioned findings.
"The white paper is designed to stimulate discussion but we as an industry don't see any need for big changes. The industry is one of the heroes as well as a solution to the housing crisis. There are many inaccuracies in the report which limits its usefulness. Most of the stuff is ill-conceived and ill-considered," Wilkinson said.
But the paper recommends improving resale and buy-back processes - now in the hands of powerful owner/operators.
Introducing a guaranteed buy-back timeframe, interest being paid to an estate when a unit is empty and the owner paying a capital gain once the place is sold are moves recommended.
Currently, estates or families of deceased are powerless to sell retirement village units or apartments because this is entirely in the hands of owner/operators. And weekly fees can be charged without any end, despite a place being empty.
Villages shouldn't charge weekly fees six months after someone dies or moves, the paper recommends. Those fees should be halved after three months.
The sector lacks a simple complaints system or authorised advocate and residents need to be given more of a voice, it says.
On emerging consumer issues, a policy review should analyse trends to see if consumers were protected enough.
Documents residents sign when they buy into villages must be simplified and online resources offered to make the processes clearer and easier for older people to understand.
Documents have previously been labelled so complicated that not even lawyers advising their clients could understand them.
"The intention of this paper is to describe the environment, discuss core issues, and start a conversation between industry, residents and government about if and where change is desirable," Wrightson said.
"We have indicated areas that, in the opinion of the commission, warrant further work."
The paper proposes it is timely, effective, and efficient for a policy review of all elements of the framework, to be undertaken by the Ministry for Housing and Urban Development with the commission's support.
An industry-focused regulatory and monitoring system had resulted in residents' associations saying elderly vulnerable residents were exposed to exploitation through harsh treatment or unfair terms.
"The difference between an independent unit and a higher level of care is not easily understood when care facilities are co-located within RV sites. Some residents or their families only understand the full impacts of some transfer terms when their individual
circumstances change, often after they have been in a village for a few years or are older
and at their most vulnerable," the document said.
People who have lived for years in an independent unit might not have enough capital to transfer to a serviced apartment.
Yet the owner/operator reaps the capital gain, has access to the vacated unit, carries on charging fees, sometimes refurbishes that place, then sells it again for a far greater price.
New Zealand's "vulnerable" population of residents is relying on laws made nearly two decades ago", the document says.
• Feedback is invited by February 26, sent directly to the commission.