Changes to the Retirement Villages Act in the wind

The Retirement Villages Act 2003, a crucial legal framework for retirement village governance, is undergoing a very thorough review after two decades of service. With the retirement village sector and elderly population expanding significantly, the need to ensure the legislation remains relevant and effective is important.

Why review?

The Ministry of Housing and Urban Development initiated the review to seek a better balance between safeguarding residents’ interests and promoting innovation within the sector. The discussion paper, available for reading here https://consult.hud.govt.nz/, outlines proposed changes
addressing various aspects of retirement village living.

What’s in the review?

One major focus is enhancing transparency before moving into a retirement village. The review recommends rewriting documents, such as the occupation right agreement (ORA) and disclosure statement, to make them more understandable. Feedback is being sought on facilitating complaints about misleading statements during the sale process and addressing inconsistencies between the ORA and the disclosure statement.

Proposed changes also target day-to-day living in retirement villages. There are suggestions to make operators responsible for the repair or replacement of fixtures that come with the unit. Additionally, the review promotes the establishment of an independent complaints and dispute resolution scheme, potentially providing free advocacy support to ease the complaint process.

Regarding the transition into care, the review encourages operators to provide clearer and more comprehensive information about residential care services and associated financial implications. The paper suggests detailing the availability of suitable rooms for on-site care and specifying costs, including potential second deferred management fees for those moving from a unit to a care suite.

The discussion paper delves into the conclusion of occupation right agreements (ORA), exploring various options such as requiring operators to repay the capital within a fixed period or allowing them to share the capital gain with residents. The paper also addresses concerns about operators charging weekly fees for vacant units indefinitely, proposing a limit of four weeks after the unit has been vacated.

In a nod to cultural considerations, the review acknowledges the predominantly Pākehā demographic of retirement villages and seeks information on the experiences and aspirations of Māori and Pasifika regarding retirement village living. The paper also considers widening the
definition of retirement villages to encompass a broader range of occupancy arrangements.

The review also looks into insurance coverage for retirement villages, addressing concerns about potential gaps if an entire village is damaged or destroyed. The proposal suggests that operators maintain insurance policies sufficient to cover all residents’ capital sums.

As the consultation period concludes, advice will be provided to the relevant minister, and the community awaits potential legislative changes resulting from this extensive review.

Conclusion. There are some significant changes in the wind. We will update the position in future editions of our newsletter. In the meantime, if you or a loved one are considering a move to a Retirement Village talk to your lawyer as early in the process as you can. We have considerable
experience in this field, including in-depth knowledge of the Villages in our catchment area.

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