Capital repayments: What do the proposed reforms mean for you?

The National Party has announced its revised position on mandatory capital repayment timeframes for retirement villages, reducing its proposed maximum deadline from 12 months to nine months. The new proposal replaces National's earlier plan for mandatory interest payments after six months, with an initial payment of 10 per cent of a resident's capital sum (less the deferred management fee) within four weeks of terminating the Occupation Right Agreement.

Labour's proposal would see an upfront payment of 10 per cent or $50,000 (whichever is the lesser) within five working days, with the balance of a resident's capital sum to be repaid within 60 working days.

So what do these proposals mean for current and future residents? And what do prospective residents actually want? This article looks at the practical implications of the two parties' proposals, as well as the insights from Village Guide's latest research on what really matters to prospective residents in the capital repayment debate.

What happens when you leave a retirement village?

When a resident leaves a village, their unit is typically refurbished and marketed for relicense by the operator. Once the operator receives a new capital payment from the incoming resident, it must repay the departing resident’s capital sum (less the deferred management fee) within five working days.¹

According to the Retirement Villages Association, the average repayment time frame is currently around seven to eight months. There is currently no maximum deadline for repayment of the departing resident’s capital sum, unless covered in the individual Occupation Right Agreement (ORA). Since December 2025, five major retirement village operators have voluntarily introduced maximum repayment deadlines into ORAs for new residents only. These deadlines range from six to 12 months.

Reform proposals

The National Party's revised reform package would see departing residents receive an initial payment of 10 per cent of their capital sum within four weeks of termination of the ORA, with indicative modelling estimating this sum to be $60,000 for an average-priced retirement village villa purchased in 2028/2029. This initial payment applies only where a resident is moving to live elsewhere, and does not apply to deceased estates.

National’s new proposal requires operators to repay the balance of a resident's capital within nine months of termination of the ORA, revised down from its original 12-month proposal after feedback from residents and their families. A hardship pathway is available for residents who need access to further funds sooner than nine months.

These rules would not apply to villages with fewer than 50 units (around 10 per cent of all units), or in a few other situations, such as where the resident receives at least half of the capital gain or controls the sale of the unit.

Labour proposes a much shorter deadline of 60 working days, with a part-payment of 10 per cent or $50,000 (whichever is less) within five working days. The deadline doesn't apply where the resident receives at least half of the capital gain.

The policy also includes an exemption where operators can demonstrate "genuine financial hardship" and Labour says this will protect small, rural and charitable villages.

While National’s proposal applies only to residents who enter into an ORA one year after the bill becomes law, Labour's proposal would apply to both existing and future residents. If elected in November, Labour has pledged to introduce this bill within the first 100 days.

Proposals at a glance

The MMP factor

Until the outcome of the November election is known, it’s not clear which bill will be introduced, nor whether either party’s proposal would have enough support in parliament to be passed into law.

The Opportunity Party recently indicated that it favours National’s nine-month repayment cap, with interest payable after three months. ACT, The Green Party and Te Pāti Māori have not indicated their positions on capital repayments. As a coalition partner, New Zealand First co-announced the government’s original 12-month proposal, but at the time of writing has not given its position on the revised deadline.

What do prospective residents want?

While Labour’s proposal applies to current and future residents, the National Party's repayment proposal will only apply to future residents, who enter into an ORA one year after the bill becomes law.

We wanted to understand what people considering the move to a retirement village think about repayment timing, and what support they might need when they leave.

For our latest research, we spoke to 177 people aged 70+ considering moving into a retirement village within two years.² We asked them to choose between a six-month repayment timeframe, and a 12-month deadline with an additional financial benefit. Around two-thirds of prospective residents chose the 12-month timeframe, if interest-free bridging finance was available where needed to cover a move to care (66%), or if they took an equal share of capital gain (64%).

For a reduced deferred management fee, a reduced entry price, and an initial payment of $50,000, the majority preferred a six-month deadline. When offered interest, respondents were fairly evenly split (52% for six months vs 48% for 12 months with 5% interest).

What about initial payments?

We asked prospective residents how much money they would need to access within 30 working days of leaving a retirement village, if the balance was repaid within 12 months.

35% of prospective residents said they would need $50,001–$100,000. Needs varied, though, with 26% saying they would need more than $100,000 and 22% needing between $25,001 and $50,000.

Prospective residents are mindful of the potential costs of faster repayment

When we asked prospective residents to rate their level of concern about a range of possible impacts of repayment deadlines, the top two concerns related to costs: 71% of prospective residents were ‘quite concerned’ or ‘very concerned’ about higher ongoing village fees, while 64% were ‘quite concerned or very concerned’ about higher village entry prices.

What do the reforms mean for prospective residents?

If you're considering moving into a retirement village in the near future, here’s what you should keep in mind:

Check whether the village is covered by the proposed reforms

National's 10 per cent initial payment and nine-month deadline will not apply to villages with fewer than 50 units, where the resident controls the sale and price, where the resident receives at least half of the capital gain, or where the village is in receivership.

Under Labour's proposal, where a resident receives at least half of the capital gain (and pays no more than the same share of exit costs), the initial payment still applies but the balance is due within five working days of the unit being resold rather than within 60 working days. Labour's policy includes an exemption where an operator can demonstrate "genuine financial hardship", while National's policy allows extensions in some circumstances.

Check the ORA

Any law change is likely to be several months to a few years away. In the meantime, whether or not there is a maximum repayment deadline depends on the terms of your ORA.

Several major operators have already introduced their own voluntary maximum repayment deadlines for new ORAs — Bupa at six months; Ryman at 12 months; Metlifecare and Oceania at 12 months (with interest after 6); and Arvida offering either 12 months or a faster six months in exchange for a higher deferred management fee.  When visiting a retirement village, ask the sales manager to explain the capital repayment policy. Read the contract carefully and as always, seek independent legal advice.

Entry costs could change

If and when a mandatory repayment deadline is introduced, it’s possible that the cost of entering and/or exiting a retirement village will increase as a result of the additional capital operators will need to hold or access.

Government modelling from the 2025 Regulatory Impact Statement (RIS)³ indicated that in with a nine-month deadline, costs in the first year could go up by $12,928 – $24,239 through an increased capital sum or fixed deduction on exit. For a three-month deadline, costs could increase by $62,699– $117,560.

That doesn’t mean that prospective residents will end up paying that much extra - the RIS noted that it was unlikely that the full amount of any increase would be passed on to new residents, as pricing is also influenced by market factors.

So where does this leave prospective residents? While it’s possible prices may go up in response to the reforms, by how much and when is unknown.

Ask about the financial implications of a move to care

Our survey results suggest that access to funds for a future move to care is an important consideration for many prospective residents.

If you’re considering a retirement village, talk to the sales manager and ask about the financial arrangements should a move to care be necessary in the future. Some operators have financial mechanisms to ensure a smooth transition to care in cases of financial hardship, but contractual terms can vary widely. Ask lots of questions and be sure to get independent legal advice.

¹Retirement Villages Code of Practice 2008.

²The research was designed by Village Guide and conducted by an independent research agency in August 2026. The findings in this article are based on responses from 177 prospective retirement village residents aged 70+ and considering a move to a retirement village within the next two years. We also surveyed 57 family members; their responses are not included in statistics referenced in this article.

³ Retirement-Villages-Act-2003-review-financial-exit-matters-regulatory-impact-statement.pdf