Retirement Village Law under Review

Is the current Retirement Village legislation fit for purpose and is it unfair to residents?

These and other questions are being considered by the Ministry of Housing and Urban Development (HUD) in its current review of the legislation governing the Retirement Village sector (Retirement Villages Act 2003 and associated codes and regulations). HUD’s review will consider if the existing law ensures appropriate consumer protections for residents and if the rights and responsibilities of residents and operators should be better defined.

The Retirement Villages Residents Association, which represents village residents, has been lobbying the Government and Opposition members of Parliament for some time for a review of the sector and in 2021 presented a petition to Parliament in support of changes to the law. The Association is pressing for the adoption of simplified and standard form occupation agreements, the ability to require operators to repay capital sum entitlements on vacating a unit rather than waiting on the operator to achieve a re-licensing of the unit, the right to share in the increase in value of the unit on termination and other changes in the terms generally available in the sector.

In response to these calls for change, the Retirement Villages Association, which represents a majority of the village operators, is opposing the need for such major changes to the sector. It places emphasis on the need for retirement villages to remain financially viable to continue to provide a flexible range of retirement housing options and consumer choice. It considers that standard form contracts will impact adversely on villages offering a wide range of services, terms and innovation and imposing a mandatory buy-back and requiring the operators to share gains on re-licensing will undermine the viability of the village sector.

The most common form of interest held by a resident of a retirement village unit is an occupation licence, called an Occupation Right Agreement (ORA). The ORA grants the resident a right to occupy a unit for life subject to payment of a capital sum at commencement, monthly fees as a share of the village operating expenses and, on termination of the licence, payment of a deferred management fee of between 20-30% of the capital sum. Typically, an ORA will not entitle the resident to share gains on re-licensing the unit and the resident’s right to receive a repayment of the capital sum is subject to the re-licensing of the unit to a third party. 

It will be seen therefore that the Retirement Villages Residents Association proposals for change represent an existential challenge to the village sector model and seriously threaten an industry that currently provides accommodation to more than 50,000 retirees throughout the country. The industry is a key part of the housing solution and the only one developing aged care in the country, so the Ministry needs to take great care in undertaking its review to make sure that the interests of the industry and residents are properly and fairly balanced. HUD has indicated that it will release a discussion document for consultation prior to the 2023 election.

If you have any questions, please get in touch with our property team or your usual contact at Hesketh Henry.


Disclaimer:  The information contained in this article is current at the date of publishing and is of a general nature.  It should be used as a guide only and not as a substitute for obtaining legal advice.  Specific legal advice should be sought where required.

Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

Related Articles / Insights & Opinion

Privacy Commissioner to consult on Privacy Rules for Biometric Information
With the increasing use of facial recognition technology (FRT), retinal scans, and voice recognition by an array of different agencies, privacy concerns about its collection and use are set to be form...
24.11.2023 Posted in Business Advice
Fern forest NZ
Bioenergy in New Zealand: Fuels for the Future?
The energy transition from combustion fuels to low carbon alternatives is viewed as critical in the race to cut global CO2 emissions and reach climate targets.  We look at some of the opportunities p...
14.11.2023 Posted in Business Advice & Climate Change & Forestry
Will Wide BW
A well drafted will is a craft
The New Zealand do-it-yourself “DIY” attitude and way of life is not limited to home improvements, but sometimes also extends to wills.  Recently we had a DIY $5.99 fill in the blanks will acros...
07.11.2023 Posted in Private Wealth
rsz large pillars
Health and Safety: The Consequences of Dishonesty
Siddhartha Gautama said that lies are like huge, gaudy vessels, the rafters of which are rotten and worm-eaten, and that those who embark in them are fated to be shipwrecked.  Two remarkable health a...
03.11.2023 Posted in Employment & Health & Safety
Properly sequencing your Construction Adjudications: Henry Construction Projects Ltd v Alu-Fix (UK) Ltd
According to the UK’s Technology and Construction Court (TCC) (in Henry Construction Projects Ltd v Alu-Fix (UK) Ltd [2023] EWHC 2010) valid payment claims must be paid before the underlying merits ...
30.10.2023 Posted in Construction & Disputes
Key change to rules on distribution of surplus assets under the new Incorporated Societies Act 2022
On 5 October 2023, the new Incorporated Societies Act 2022 (2022 Act) came fully into force, replacing the Incorporated Societies Act 1908 (1908 Act). One of the key requirements under the 2022 Act is...
18.10.2023 Posted in Business Advice
Construction Framework Wide BW
Major milestone passed – NZS3910:2023 expected in time to fill Christmas stockings
As the most widely adopted standard form construction contract in NZ, NZS 3910 was more than ready for updated conditions given the changes in the industry since its last review in 2013.  After almos...
09.10.2023 Posted in Construction
Send us an enquiry

For expert legal advice, please complete the form below or call us on (09) 375 8700.