HomeKids & familyRetirement villagesLeaving the village

In this report

Related Information

Reports:

Rest homes

close Print
- Print page
- Print whole report
print
comments (6)
share

Retirement villages Updated: 13 Mar 2007

Leaving the village

The new Act requires village operators to state in writing their terms and conditions when a resident wants out.

Residents are usually up for a village contribution, plus the costs of refurbishing the dwelling, plus selling fees or an administration charge. This is deducted from the original purchase cost, with the resident getting the difference (and often no capital gain, even if the operator resells at a higher price).

That's in a "rising" market. What if the value of the unit or villa falls? The two examples below show the maths. In each case, the resident bought at $300,000 and then left after six years.

Auckland lawyer Brian Ellis says the problem of capital losses is made worse because licences to occupy often require residents to continue to pay the weekly fee months after they've left the village. This gives the operator little incentive to sell the unit, particularly if it has new units for sale.

The new Act requires an operator to reduce the weekly fee charged to the former resident by at least 50 percent if a new occupation-right agreement hasn't been signed within six months. Operators also have to provide a former resident with monthly updates if a new occupation right agreement has not been issued three months after the resident departed.

If the property is still vacant nine months after their departure, the former resident can lodge a dispute notice against the operator.