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Govt urged to look overseas for ideas on retirement villages reform

25 Mar 2024

| Author: Bryce Town

Practitioners may be aware the Ministry of Housing and Urban Development is undertaking a review of the retirement village legislation.

It is a generally accepted view among the profession that our 2005 legislation is long overdue for major changes, given the obvious imbalance that exists between retirement village operators, including multi-billion-dollar listed companies, and elderly New Zealanders with limited choices in the last years of their lives.

The Property Law committee has made submissions on the review, saying that a rebalancing is required. Given the significant growth of the retirement villages industry (for example a 24% increase in villages from 2012 to 2021 and a 60% increase in unit numbers over the same period), it is critical that festering issues be dealt with so our vulnerable elderly can be treated fairly in the future.

The committee also submitted that perhaps rather than continuing down the narrow path of our retirement living model, that some research is undertaken into differing retirement living models, particularly since the retirement living models used in New Zealand are rarely seen in other comparable countries. In Australia, England and European countries, for example, the emphasis is on a rental retirement residence model rather than a licence-to-occupy model.

There is a long list of complaints about our licence-to-occupy model. They include:

  • intense dissatisfaction amongst residents’ family members because of its high management fees and the failure to pass on capital gains;
  •  inability to have a genuine negotiation with the operator as to terms;
  • offloading on to residents the maintenance costs of owner operated chattels and fixtures;
  • problems with residents moving from retirement village living into aged residential care; and
  •  the lengthy delays in repayment of capital sums on the resident’s death.

The review must address how the one-sided terms can be rebalanced so our elderly can be given a fair go. We trust it attracts significant numbers of submissions from all interested parties so there can be a genuine discussion as to how retirement villages should operate in the future. To all legal practitioners, I suggest you keep a weather eye on developments with this review during the next 12 to 18 months and if you wish to participate in the process, please take whatever opportunities are available. ■

 

Bryce Town is a partner at Morrison Kent and a member of The Law Association’s Property Law committee, of which he was the convenor for more than 15 years ■

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