Retirement village contracts

For many villages, another major selling point is the rest home care they provide if you can no longer live independently.

However, behind the glossy marketing, exactly what you’re buying into – and whether there really will be care available – isn’t always clear-cut.

A report by the Commission for Financial Capability (CFFC), which is responsible for monitoring retirement villages, found contracts presented to prospective residents could be so complicated that even lawyers specialising in the field might not understand them.

The report takes aim at villages failing to explain rest home care isn’t necessarily guaranteed. Residents may face extra charges or even have to move out if care isn’t available when they need it.

Troy Churton, CFFC national manager of retirement villages, said “retirement village operators are not explaining this clearly enough in their marketing and in the contracts they offer to intending residents”.

Mr Churton said more than 70% of villages now had care facilities on site. A person who moves into an apartment or villa “may think they can move easily into the care facility on site should they need to, but that’s not necessarily the case”.

What needs to change

The commission’s review is further evidence that existing safeguards aren’t ensuring consumers moving into retirement villages get the advice they need.

Complex contracts are a major barrier to consumers understanding what they’re signing up for and to getting good advice.

Our past reviews of retirement village contracts have also found unfair terms we consider likely to fall foul of the Fair Trading Act.

To cut through the confusion, villages should be required to provide a simple summary of key terms and conditions, and contracts written in plain English.

The commission is also calling for better disclosure, which tells consumers “really clearly” what happens if they need care and simplifies “the jargon that could confuse both prospective retirement village residents and their lawyers”.

Our advice

Before you sign on the dotted line, ask the village operator what happens if you need care:

• Will you be able to continue to live in your unit if your health or mobility declines?
  
• What control do you have over the decision you’re unable to cope in your existing accommodation?
  
• Are there rest home and hospital facilities at the village?
  
• Do residents have priority for these facilities?
• What extra charges might you have to pay for using them?
  

Ask about the quality of care provided in the village’s rest home and hospital facilities. Check the latest rest home audit report on the Ministry of Health’s website and ask the village whether there have been complaints about the healthcare it’s provided.

You can also ask the village whether it's had complaints about its other services. Operators are required to report to the Retirement Commissioner about whether they’ve received complaints in the previous six months. Of the 290 villages that provided figures for the six months to 31 March, 205 complaints were recorded across 80 villages.

The top three complaints were service quality, maintenance and repair of buildings, and resident behaviour. Sixty-seven percent of complaints were resolved within 20 working days.

However, these figures don’t provide a complete picture as not all villages filed reports. The CFFC said it had taken “further steps” to improve reporting for the next six-month period. Reporting data can be found at the commission’s website.