Frequently asked questions

There is a lot of information you need to be aware of when considering moving to a retirement village. Village Guide has put together a list of some frequently asked questions along with detail around some common terminology you may hear.

What is the Retirement Villages Act 2003? ×
The Retirement Village Act has been put in place to look after the rights of both intending and current residence. The act places control over how retirement villages are run with regulations that must be adhered to. 

Some items that the Act includes have been listed below:

  • Ensuring all new residents receive and understand their legal contract (Occupation Right Agreement)
  • Having a standardised cooling off period once an ORA is signed
  • The appointment of a ‘statutory supervisor’ for each village who is responsible for ensuring the village is run in a financially responsible manner which includes proper financial reporting
  • Ensuring all villages have a Code of Residents’ rights
  • Ensuring all villages have a structured disputes process
  • Ensuring all villages have a structured sales & marketing process when residents leave the village

View an online version of the Act

What is the Retirement Villages Code of Practice 2008? ×

The Retirement Villages Code of Practice 2008 (variations 2013), forms part of the Retirement Villages Act and sets out the minimum requirements that village operators must meet, which include the minimum requirements for the occupation right agreement. These requirements include;

General requirements
  • Policies and procedures, notices, and induction requirements
Minimum requirements to be included in any occupation right agreement
  • Staffing at the retirement village
  • Safety and personal security of residents
  • Fire protection and emergency management
  • Transferring residents within a retirement village
  • Meetings of residents with operator and resident involvement
  • Complaints facility
  • Accounts
  • Maintenance and upgrading
  • Termination of an occupation right agreement
  • Communication with residents
What is an Occupations Right Agreement? ×

An Occupation Right Agreement is the name of the legal contact between the village and a resident. The ORA sets out payment information, the village disputes process and termination rights. It is important that you work through your ORA with your lawyer and ensure you understand each part of the agreement prior to signing.

Is it important that a lawyer looks over my Occupation Right Agreement? ×

It is a requirement that each new resident receives legal advice to ensure understanding of the occupation right agreement prior to signing. The lawyer is required to witness the residents signature after clearly explaining all content of the agreement.

The resident is welcome to use a lawyer of their choice to review, explain and witness the signature or alternatively residents can contact the New Zealand Law Society for a list of lawyers in their region who specialise in retirement village contracts. 

It is important that any verbal agreements between the village operator and the resident are either amended in the contract or alternatively document separately in writing and signed by both parties. Any changes should be discussed with your lawyer who can support you with ensuring they are recorded officially in writing.

What is meant by ‘License to Occupy’ ×
A license to occupy is the most common legal title which New Zealand retirement village units are sold on. ‘License to occupy’ means the resident is paying to live in the unit for the duration of their life or for as long as they choose. In the majority of cases, residents cannot borrow against the capital equity of the unit and will most likely NOT be entitled to any capital gains. Some villages do offer an option to share in the capital gain by paying an upfront fee.

Residents may also be liable for capital loss if the ‘entry payment’ the new resident pays is less than what was paid by the previous resident. This is an unlikely situation but could occur with external market factors pushing value down. It is recommended that you speak with the village manager or sales consultant to make sure you have a clear understanding of the contractual details surrounding capital gains and loses. This information can also be found in the village's most recent ‘disclosure statement’ which is listed on the New Zealand Companies Office website.

Questions to ask
1. Am I entitled to any capital gain made on the unit?
2. If so, what are the details surrounding ‘sharing of any capital’ i.e. do I need to pay an upfront fee and is it split 50:50?
3. Am I liable for any capital loss and will I have a say on what price the unit is marketed at?
What is the statutory supervisors role? ×

As part of the Retirement Village Act, the operator must appoint a statutory supervisor unless exempt by the Register of Retirement Villages. The statutory supervisors role is to financially monitor the village and ensure they are performing their duties in accordance with the act. The statutory supervisor is required to report the financial position of the village to the residents and the Register of Retirement Villages. The statutory supervisor will also look after any deposits and progress payments made by residents or intending residents e.g. will hold a deposit during the ‘cooling off period’.

What is a Code of Residents' Rights ×

This document outlines your right as a resident while living in the village in accordance with the Retirement Village Act 2003. This includes:

  • Your right to any services and benefits as outlined in your Occupations Right Agreement
  • Your right to make a complaint and be responded to in timely manner
  • Your right to have any disputes responded to in an efficient and timely manner
  • The right to proper consultation of any changes in the village which would affect you. E.g. a weekly fee increase or changes to any current services offered
  • Your right to be treated with courtesy by the operator and all staff
  • Your right to not be exploited by the operator or any of the staff
  • Your right to have a support person for any dealings with the operator if you wish to do so
What role does the Retirement Village Association (RVA) play? ×
The Retirement Village Association is a voluntary organisation, governed by an executive committee, which is made up of senior members of accredited villages such as CEO's and CFO's. Retirement villages who choose to become a registered member of the RVA have to adhere to the associations auditing and accreditation scheme. This scheme requires villages to be audited every three years, ensuring they are compliant with the Code of Practice as set out by the Retirement Villages Act 2003. 

The benefit for residents choosing a RVA accredited village is reassurance that the village is being run in accordance with the Retirement Village Act as well as demonstrating a level of commitment by village management to operate in a manner that both protects and meets the needs of their residents.

What does a residents' committee do? ×

Typically, the main role of the residents' committee is to represent the interests of residents by acting as the communication channel between them and the operator.

Specific functions of a residents committee include:

  • Calling a meeting with the operator or its representative. The operator or its representative is expected to attend residents’ committee meetings when invited, unless the request is in some way unreasonable (e.g., too short a period of notice).
  • If the village has a statutory supervisor the residents’ committee may call a meeting with the statutory supervisor. The statutory supervisor is expected to attend residents’ committee meetings when invited, unless the request is in some way unreasonable (e.g., too short a period of notice).
The village operator is required to adhere to the above as outlined in the Code of Practice 2008.
What is a disclosure statement? ×
The disclosure statement is a very important document as it contains the majority of information regarding the village. Listed below are items that the disclosure statement includes.

  • Who owns the village and the management structure.
  • Who the statutory supervisor is and their role.
  • All costs associated with entering, transferring and leaving the village. It also includes all costs while living at the village such as weekly fee payments.
  • Whether residents will receive any capital gains or be liable for capital losses.
  • What the cooling off period is after a contract is signed. As per the Retirement Villages Act, this will be a minimum of 15 days.
  • Lists all services and facilities that the villages offers.
  • The marketing  & sales process when a resident leaves and what happens if there is a delay in the sale.
  • How the maintenance and refurbishment of the village is handled. This is most commonly included as part of the deferred management fee paid upon exit.
What is a deferred management fee? ×

Other terms used to describe the deferred management fee may include membership fee, amenities fee, facilities fee, departure fee, village contribution or exit fee.

The deferred management fee (DMF) is accrued during your period of ownership and is deducted on the sale of your unit. Calculation of the fee is commonly calculated as a percentage of the purchase price multiplied by your years of occupancy and will include a maximum amount. What the fee covers may vary from one to village to another so it is very important that you discuss the details of the fee and how it is calculated prior to making any commitment.

Some examples of what it may cover are:

  • Refurbishment of your unit after you leave
  • Marketing & legal fees used to re-licence your unit
  • Maintenance of village communal areas 

Please note that the above are just examples. The details and calculation of the fee should be discussed with each individual village that you are interested in.

What does my entry fee cover? ×

The entry fee gives the resident the right to live in the property for their lifetime or as long as they choose. When the resident leaves the village they will receive the cost paid (entry fee) minus the deferred management fee and any other outstanding costs due at that time.

Are weekly fees likely to go up while I’m living in the village? ×

This will be dependent on the retirement village you are looking at however it is common for managers to review fees on an annual basis. It is a requirement for all registered villages to notify residents formally by letter of any fee increases. Some villages increase fees based on the percentage increase of New Zealand’s superannuation each year where as others only increase fees if the villages operating costs go up e.g. if rates or insurance costs of the village where increased.

What does the weekly fee cover? ×
The weekly fee that you pay covers the day-to-day operation and management of the village. This fee may include items such as rates & taxes, insurance, staffing costs, lawns & garden care, running of cafes and other facilities that the village may offer. Make sure you ask each village to provide you with a breakdown of what the charges and benefits that this fee covers.
Do all villages have a complaints process? ×

Yes as outlined in Retirement Village Act, all registered New Zealand villages must have a complaints process which is made known to residents. 

What is the typical sales process of village units and what happens if there is a delay in sale? ×

The majority of villages will manage the sales and marketing process of a property once the resident moves out. As per the Code of Practice, the former resident is able to introduce a new resident if they meet the normal entry criteria for the village. If this person buys the unit, then the former resident must be notified and the sales cost charged must be the the actual costs incurred.

The Code of Practice 2008, outlines what happens in the case of a delayed sale:

If the property has not been sold within 3 months the village is required to let the resident (or enduring power of attorney) know in writing and provide monthly reports until it is sold. These reports will contain what steps the village is taking to market the property and the progress being made. If the property has not been sold after 6 months then the village (at their expense) must obtain a written valuation by an independent registered valuer. The resident is welcome to have his or her own valuation completed (at their cost) with a registered valuer. The village is then required to market the property according to the valuations completed. If the property has not been sold after 9 months then the resident has the option to raise a dispute notice.

It may be worthwhile discussing any other policies that the village has in place surrounding the sale of village units. For example Bupa villages have a ‘buy back guarantee’ which means if your unit has not sold after 6 months then they will pay you what is owed.
Do residents continue to pay weekly fees while the unit is on the market? ×
Whether residents will be required to pay fees once they leave the village and for how long differs depending on the village. It is important that you ask the village manger or sales representative this question prior to signing the occupations right agreement so there aren’t any unplanned financial costs once you leave.
Once a resident leaves the village when will they be paid what is due? ×
The most common situation is for payment to be made on settlement of the new occupation right agreement i.e. when a new resident has been found and has signed all legal contracts required to become a resident.
Can I have friends and family to stay? ×

It is likely that you will be able to have friends and family to stay at the village. The duration that they can stay will be outlined in your occupation right agreement. Some villages will allow you to have friends in family in your unit while others have separate accommodation either on-site or nearby which can be used.

It is also likely that friends and family will be able to use the village facilities as long as you or another resident accompanies them. However each village may have a slightly different policy around this so make sure you check with the village manager.

Can I have pets in the village? ×

Most villages will allow small well-behaved pets in the village as long as it is agreed to by the village manager first. However this is not the case for all villages and some will have a 'no pets' policy so it is important you ask this question.