Capital repayments: Operators introduce voluntary repayment deadlines

As debate continues over how quickly retirement village operators should be required to repay capital sums when a resident leaves a village, five of the larger New Zealand operators have now introduced voluntary maximum repayment timeframes.

Under current legislation, there is no maximum time frame in which an operator must repay a resident’s capital sum after departure from the village. Both the National-led government and the Labour Party want to change this, with National proposing a 12-month repayment deadline and Labour, a deadline of 60 working days (3 months).

In the meantime, several of the larger New Zealand retirement village operators have voluntarily introduced maximum repayment timeframes into Occupation Right Agreements (ORAs) for new residents. These deadlines range from 6 to 12 months, offering new residents greater certainty while the debate continues.

This article looks at how capital repayments currently work in New Zealand, and compares the proposals put forward by National and Labour with capital repayment deadlines across Australia, and the deadlines introduced by several major operators.

The current situation

When a resident leaves a retirement village, their occupation right agreement ends. The village operator will refurbish and market the unit before a new agreement is entered into with the next resident. The departing resident’s capital sum, less the deferred management fee, is then repaid. This is sometimes referred to as an exit entitlement or exit payment.

Under the Retirement Villages Code of Conduct 2008, the capital sum must be repaid to the departing resident, within five working days of the operator receiving the new capital payment from the incoming resident.

The uncertainty arises where a unit is not relicensed promptly after a resident leaves a village. If there is no incoming resident, when should the departing resident’s capital sum be repaid?

Currently, the act contains no maximum deadline by which a retirement village operator must repay a resident’s capital sum after a unit has been vacated. Unless otherwise specified in the ORA, the capital sum can be retained by the operator until a new occupation right agreement is entered into with the next resident.

Both the government and the Labour Party agree that a maximum time limit on repayments is desirable. The question is where that limit should be set.

Why repayment limits matter

From a resident’s perspective, a significant delay in repayment can prolong an already uncertain period and make it difficult for residents and their families to plan their next steps.

The departing resident may need access to capital for personal reasons, or if moving into aged care, to cover care costs. If the resident has passed away, their estate will have funeral costs to cover, and delay can lead to uncertainty for beneficiaries.

From the retirement village operators’ perspective, capital is not typically held in a bank account, but used to build new homes, develop shared facilities and amenities, and support the continuum of care that links independent living, serviced apartments and care beds.

If the maximum repayment deadline is short, operators may need to repay capital sums before units have been relicensed. Operators will need to retain ready access to large sums of capital, which may result in increased costs to residents, or limit the development of new amenities, care facilities and homes.

A short repayment timeframe may be especially difficult for smaller operators, or when several residents move into care or pass away around the same time.

It’s worth noting that it is in both parties interests for units to be relicensed and capital repaid. Just as residents would prefer to have access to their capital sooner rather than later, retirement village operators prefer to have units fully occupied.

Why does repayment take so long?

Once a resident has vacated their unit, the property is refurbished and prepared for market. The amount of refurbishment required will have a bearing on how long this process takes.

The unit is then marketed to prospective residents. Like any property transaction, how long it takes to relicense the unit will be impacted by factors like the availability of comparable units in the local area; the desirability of the individual unit; the buoyancy of the residential property market; and whether the incoming resident needs time to sell their own home before completing the transaction.

How long does repayment take in practice?

According to the Retirement Villages Association, the average time to relicense a unit and repay capital is currently 7 to 8 months after the home has been vacated (June 2026). Executive Director Michelle Palmer recently told the New Zealand Initiative podcast that the average time frame is often aligned with the performance of the local property market, and in the past, has been as short as 4 to 5 months.

What proposals are on the table?

The government has proposed an amendment to the Retirement Villages Act 2003 setting a maximum repayment deadline of 12 months after a unit is vacated, with interest payable after 6 months. This limit would apply to future ORAs signed one year after the bill becomes law.

The Labour Party has put forward a separate member’s bill, which would require a payment of either $50,000 or ten percent of the capital sum within five days of a resident’s departure, with the balance payable within 3 months. This deadline would apply to both current and future ORAs. Labour has pledged to pass this bill into law, if elected.

How are the operators responding?

While the legislative uncertainty continues, several of the larger New Zealand retirement village operators have moved to incorporate voluntary maximum repayment timeframes into their Occupation Right Agreements (ORAs) for new residents.

Bupa’s maximum repayment deadline is the shortest at 6 months + 5 days, while Arvida, Oceania, Metlifecare and Ryman have deadlines of 12 months. Arvida also offers a 6-month repayment deadline option, if you opt for a higher deferred management fee.

Operators	Labour Proposal
	12 months + 5 days OR 6 months + 5 days if you opt for a higher deferred management fee
	6 months + 5 days If the capital sum cannot be repaid by 6 months + 5 days, interest is payable
	12 months Interest payable after 6 months
	12 months Interest payable after 6 months
	12 months

Each of these maximum repayment deadlines may have terms and conditions attached; please refer to the operator’s ORA for full details.

For all other operators, check the terms of the ORA or ask the sales manager if there is a repayment deadline.

What is the repayment limit in Australia?

Across the Tasman, the retirement village landscape is more complex, with a range of different occupancy options and legislation that varies from state to state.

For owner-occupied units, repayment deadlines range from 6 months in Tasmania and urban New South Wales, to 18 months in Queensland, with no time limit in Australian Capital Territory and the Northern Territory. South Australia, Victoria, Western Australia and wider New South Wales all have 12-month repayment deadlines.

Note, this table refers only to maximum payment deadlines; other terms and conditions may apply in each state.

Where to from here?

Any law change is likely to be some time away, as a draft bill will need to be introduced to parliament and pass through the usual select committee and legislative stages. Make sure you’re subscribed to Village Guide for further updates.

If you’re actively considering a retirement village, ask the operator whether the ORA includes a capital repayment deadline, and make sure to read and understand any terms or conditions that apply.

Frequently asked questions

Is there currently a deadline for retirement village operator to repay a resident's capital?

No. Under current legislation, there is no maximum time frame in which a retirement village must repay a resident's capital sum once a home has been vacated. Unless the ORA states otherwise, retirement village operators can retain the capital sum until the home is relicensed.

Do National and Labour agree on introducing a deadline?

Yes — both parties support setting a maximum repayment deadline, though they disagree on how long that period should be.

What repayment deadlines have National and Labour each proposed?

National has proposed a 12-month maximum; Labour has proposed a shorter maximum of 60 working days.

Have any retirement village operators already introduced their own deadlines?

Yes. Several New Zealand operators have voluntarily adopted a maximum repayment deadline. ahead of any legislated requirement to do so. Bupa’s repayment deadline is 6 months + 5 days, while Arvida, Oceania, Metlifecare and Ryman have deadlines of 12 months.

How does Australia handle repayment deadlines?

Deadlines vary by state, ranging from 6 to 18 months. The ACT and Northern Territory have no maximum deadline.

Why does the length of the deadline matter?

It determines how long a resident or their estate may need to wait for their capital to be returned after leaving a village. A shorter deadline gives residents more certainty, but may be harder for operators to meet if the unit hasn't yet been relicensed; a longer deadline gives operators more room to manage that process, but residents or their beneficiaries may have to wait longer for their money.