Case for retirement villages made at Whanganui Grey Power meeting

SPEAKER: Retirement Villages Association executive director John Collyns talks at Whanganui's Grey Power AGM.PHOTOS/STUART MUNRO

Selling the family home and moving to a retirement village can free up capital and make for a better lifestyle, Retirement Villages Association executive director John Collyns says.

He was invited to Whanganui to speak at Thursday's Grey Power annual general meeting, and wanted to emphasise New Zealand's "world leading" consumer protection for residents.

He said the Whanganui-Manawatu region had fewer retirement villages than most parts of New Zealand - just 9.3 per cent of people over 75 lived in one, while the New Zealand average is 12.4 per cent, with the percentage is higher in places where property is very expensive.

In regions with lower property prices it was hard to keep the price of a retirement village unit affordable. It was usually between $200,000 and $400,000 - two-thirds to three-quarters of the price of a freehold townhouse.

About 20 per cent of people selling up the family home and moving into a retirement village freed up more than $200,000 of equity. Only five per cent of those selling to buy a freehold unit were left with that much.

Retirement village units were typically smaller than other new houses - in 2013 new houses averaged 185sqm. Retirement village units were typically one- or two-bedroom, but better insulated, warmer and easier for an older person to move around in.

People moving into a retirement village did not own their unit. Instead they bought a licence to occupy it. When they didn't want it any more they could move out.

The licence was then terminated and the retirement village operator refurbished and sold the unit. If they had been there for three years or more they got 70 to 80 per cent of their licence price back.

The 20 to 30 per cent not repaid to them was a "deferred management fund" - the cost of the shared facilities..

People who had lived there for less time got less back.

Residents also paid the village a weekly fee that covered rates, insurance and staff wages. This could make living there cheaper than living in unit they owned.

If the retirement village was sold their contract had to be honoured by the new owner, and they could not be evicted.

People buying a licence to occupy were required to consult a lawyer first, to ensure they understand what's entailed.

"The lawyer then has to sign an affirmation to say they have given the residents advice, so the resident is taking the decision with full disclosure," Mr Collyns said.

He planned to give Grey Power members some guidelines about getting into a retirement village. He said it was important to make the move while still able to make new friends.

Most people moved to a retirement village near their previous home, in order to maintain relationships.

In 1991 more than 85 per cent of people aged 60 to 64 owned their own home. That percentage was reducing, and affording a unit in a retirement village was difficult for people with no property to sell.

The association was working on ways to make units more affordable - perhaps by renting them out or by lending money to people who could not pay for a full licence.

New Zealand's ageing population meant many more retirement units would be needed, especially in Auckland, Hamilton and Tauranga. People moving into them should free up houses needed by homeless people.

Retirement villages had only become a mainstream choice for older people in the last 30 years. The owners of the villages were 70 per cent big corporations, with the rest private and not-for-profit organisations.

Older people liked retirement villages for their security and companionship, and because any maintenance was done for them.

"Some people relish the move and find it really works for them. A minority find it's a disaster," Mr Collyns said.