Retirement village residents could be divided by some of the Government's proposed reforms to the Retirement Act 2003. Photo / NZME
The Government’s promise of fairer rules for retirement villages could backfire if reforms only apply to future contracts and not to those who’ve fought so hard to secure them, residents warn.
Their comments follow today’s announcement by Associate Housing Minister Tama Potaka and Seniors Minister Casey Costello regarding the Retirement Villages Act reform.
Key improvements included a process for former residents to apply for early access to funds in situations of specific need; interest must be paid after six months if a unit remains unlicensed or unsold; repayment of funds no later than 12 months after a unit is vacated, and weekly fees and deductions stopping immediately when a resident vacates.
A Northland retirement village resident said after a long career in community advocacy, the last thing she expected when moving into her unit about five years ago was more battling.
But issues in her village – especially an ongoing wait for a promised specialist care facility – changed that.
She and her family had invested time and energy lobbying politicians during the review of the Retirement Act 2003.
News that the proposed benefits announced today might not apply to her was “extremely unethical, unfair, and likely to be divisive”, she said.
“To think that a new neighbour might move in next door and be able to benefit from changes we fought for when we can’t – that’s really bad.”
Retirement Villages Residents New Zealand Association (RVResidents) president Brian Peat said the stronger protections mark progress after five long years of sector review, public consultation and resident advocacy.
More than 11,000 submissions were received when the review was announced, with RVResidents a strong voice among them.
Positive changes included weekly fees stopping when a resident exits their village, clearer maintenance responsibilities, and a new complaints scheme.
However, many of the changes only apply to future residents, leaving those under old contracts for years without protections, Peat said.
“New residents will have clear rights while existing residents will be left in limbo. That is the definition of a two-tier system.
“We acknowledge governments are wary of retrospective legislative change. But this has worked overseas and there are practical ways to avoid unfairness to operators while still ensuring that current residents and recent exiters are not written out of history,” Peat said.
He warned limiting reforms to new contracts could cause delay and inequity: seniors postponing moves until new rules apply to the detriment of today’s exited residents waiting for their funds back; operators prioritising units under the new law first; and long-waiting former residents being pushed further down the queue.
Peat said another concerning proposal in the announcement was a mandatory 12-month repayment timeframe, that “falls far short of residents’ needs and expectations”.
“Our members have been very clear – there must be a mandatory repayment timeframe, and the overwhelming majority considered three months to be fair and reasonable.”
Peat said only a small minority viewed six months as acceptable.
“The message is simple: people cannot put their lives on hold for a year or more while they wait for money they are contractually owed.”
The Retirement Villages Association (RVA) also objected to some of the proposals.
RVA executive director Michelle Palmer believed the proposed changes to the act were flawed and will heap significant financial pressure on to small to medium-sized operators, while putting the brakes on new villages and care beds.
Palmer warned that introducing both interest payments after six months and a mandatory 12-month buy-back period would create a “double financial hit”, forcing operators to seek new credit lines and potentially pushing up resident costs.
She said the model relied on funds being tied up in infrastructure and services, not sitting idle, and operators only receive deferred management fees when new residents move in.
The RVA supports paying interest if repayments take too long but opposes a fixed repayment timeframe, arguing it could slow development, reduce care bed delivery and even force closures of smaller regional and charitable villages.
Palmer said mandatory buy-back rules in Australia led to higher fees and fewer choices for older people.
While welcoming reforms such as stopping weekly fees on exit and clearer maintenance responsibilities, Palmer said the combined financial burden could derail the Government’s goal of encouraging the construction of more retirement homes and the associated increase in care beds.
A recent Jones Lang LaSalle report forecasts a shortage of more than 11,000 retirement village units by 2033, rising to 23,000 by 2048.
The bill is expected to be introduced to Parliament in the middle of next year, with the select committee process giving another opportunity for residents, families, and operators to have their say, the ministers said.
Sarah Curtis is a news reporter for the Northern Advocate, focusing on a wide range of issues. She has nearly 20 years’ experience in journalism, most of which she spent court reporting in Gisborne and on the East Coast.