Government presses ahead with retirement village rule changes

Changes planned for the Retirement Villages Act should help to reduce the amount of time that some people have to wait for their money back when they leave a retirement village.

Changes to the Act have been long-signalled, and a long time coming, since a review into the law more than two years ago.

Around 100 residents came to Parliament last month to advocate for changes.

Among their key concerns were that there needed to be a buyback timeframe, as there was currently no deadline for operators to repay residents, or their families, once they had left the village.

Some residents and their families have complained of long waits before a unit is resold.

Associate Housing Minister Tama Potaka said the changes, which will go through a full legislative process, would strengthen protections, including requiring operators to be upfront about what they offer, and to set clear responsibilities for the chattels they own.

Villages will have to repay funds no later than 12 months after a unit is vacated.

Residents will also be able to apply for early access to funds in situations of specific need, interest will accrue after six months if a unit has not been resold, and weekly fees will stop immediately when a resident leaves.

The changes also include:

• A process for former residents to apply for early access to funds in situations of specific need
• Interest being paid after six months if a unit remains unlicensed
• Repayment of funds no later than 12 months after a unit is vacated
• Weekly fees and deductions stopping immediately when a resident vacates

Around 63,000 New Zealanders currently live in retirement villages, with two thirds of those villages also providing aged care facilities.

Potaka said for too long, residents had faced uncertainty, especially when moving out or waiting for money to be repaid.

"These changes put people first by setting clear expectations and making the whole system more transparent," he said.

A review conducted by the Ministry of Housing and Urban Development began under the previous government and attracted more than 11,000 submissions during consultation in 2023.

Progressing the review was part of National and New Zealand First's coalition agreement.

The legislation will be introduced to Parliament by mid-2026.

'A welcome step in the right direction'

Retirement Commissioner Jane Wrightson said she was pleased the government had decided to go ahead with the reforms.

"This is a landmark moment for older New Zealanders and their families. The Retirement Commission has worked for many years to highlight the need for fairer, clearer, and more balanced rules in retirement villages.

"We are pleased to see the government's commitment to modernise the Act and rebalance the rights of residents and operators."

She said the changes would help ensure dignity, fairness and peace of mind for people who chose to live in retirement villages.

The Retirement Villages' Residents' Council also welcomed the changes.

"These changes are a welcome step in the right direction. They strike a better balance, being fairer for residents and village operators alike," spokesperson Carol Shepherd said.

"As representatives of residents of villages across New Zealand, we would have liked the repayment of capital to have been six months, not 12 months.

"We also acknowledge that some residents who are in villages today will be upset that the new regime will not apply to their contracts.

"However, overall, these reforms strengthen protections for residents, particularly future residents, and their families without undermining the ability of operators, large or small, to invest, maintain quality, and provide a range of accommodation options for older Kiwis."

She said the introduction of an independent complaints resolution scheme was also a good step.

"It's important that residents and their families who make such a significant investment in their twilight years can access a low cost, independent process to resolve issues - this will reduce stress and speed resolution."

But the Retirement Villages Association, which represents village operators, was not pleased.

It said the changes were flawed and would put pressure on small-to-medium operators, as well as disincentivise new develop.

"Introducing both interest after six months and a 12-month mandatory buy-back period for village operators will create a double financial hit and have a chilling effect on the development of retirement villages and care beds," said RVA executive director Michelle Palmer.

"These proposals won't just burden operators - they risk derailing the government's ambition to build more homes and care beds for older New Zealanders. They will slow development when we urgently need to accelerate it.

"Requiring interest at six months effectively brings the buy-back burden forward - with costs starting to mount at six months and then crystallising at 12 months, compounding the financial pressure.

"We support operators paying interest if repayments take too long, rather than a fixed mandatory repayment period.

"As it currently stands, the mandatory repayment period will, for some operators, push up costs for residents, slow down new development and the delivery of new care beds, and may force the closure of smaller regional and charitable villages.

"That's because the way the retirement village model works means funds are committed to debt repayment, infrastructure and services, not sitting idle."

She said reselling units would require refurbishment, marketing and settlement.

"Operators are already strongly incentivised to resell independent living units quickly because they only generate payment once a new resident moves in.

Adding interest after six months would create even more incentive, but if the operator also has to pay out six months later, it's a double whammy."

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