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Retirement villages

Retirement villages offer a desirable lifestyle choice for some. But what protection do you have if things go wrong? We look at what you need to consider, plus we've developed a free downloadable checklist for assessing a retirement village: Retirement villages checklist (47.2 KB)


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Promises were plenty at Wanaka Bay Village in New Plymouth. Over 100 luxury villas were planned, complete with swimming pool, spa, all-weather tennis court, bowling green and gym. But when the retirement village folded in September 2012, 5 years after it opened, only 9 of the villas had been built.

Kate Sheppard retirement village was effectively destroyed by the Canterbury earthquakes (see "Cracks in the code", below.)
Kate Sheppard retirement village was effectively destroyed by the Canterbury earthquakes (see "Cracks in the code", below.)

Residents of the village have since moved out. A buy-out deal involving another operator has seen them finally able to get on with their lives after months of financial uncertainty. The 9 brick-and-tile units have been advertised on TradeMe for rent at $360 a week each.

Industry commentators say Wanaka Bay's demise is unfortunate but doesn't indicate wider troubles in the sector. The Retirement Villages Association, which represents 80 percent of villages, says companies fail from time to time in any industry and the sector is still geared for growth.

Receivership may be a worst case but the Wanaka Bay saga exposes the risks consumers face when a village fails to deliver on its grandiose plans. While you can check in any time you like, it's hard to get out without taking a financial hit if the reality doesn't match the rhetoric.

Market growth

Retirement villages have grown rapidly over the last decade. Data from the Companies Office show there are 348 registered villages.

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Customer satisfaction

Around 5 percent of Kiwis over 65 have moved to a retirement village. Research indicates most believe it was the right thing for them. Bill Atkinson from the Association of Residents of Retirement Villages calls it the "best move" he ever made.

But it's not all beer and bowling greens. Bill says the Retirement Villages Act, introduced in 2003 in an effort to protect residents in the rapidly expanding market, is "far too open to interpretation". He says standards vary as a result and residents bear the brunt of poor performers.

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Financial safeguards

Several reports for the Retirement Commissioner have also flagged concerns about the financial oversight of villages and the role of the statutory supervisor. The Act requires all villages (unless they have an exemption) to appoint a statutory supervisor to monitor their financial position.

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Consumer protection

Changes that came in late 2012 now require statutory supervisors to be licensed by the Financial Markets Authority (FMA). Licences have been granted to 8 companies, subject to conditions. Supervisors are required to report regularly to the FMA, with the first reports due at the end of March 2013.

Retirement Commissioner Diana Crossan says there's still more that can be done to clarify the supervisor's role, including the extent to which they act as advocates for residents. She says this should be considered in a review of the legislation. The issue of an independent advocate for residents also warrants "more thinking".

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Our view

  • Moving into a village is a major decision with significant financial implications. If you make the wrong call, it's not always easy to back out without financial loss.
  • Given the risks, legislation needs to ensure there's effective scrutiny of the market and safeguards for consumers.
  • We support calls for an independent consumer-advice service for residents and intending residents. Consumers also need access to a workable complaints process.

Report by Jessica Wilson.

Retirement villages checklist

Use our checklist to assess prospective villages.

We're not suggesting you should only go into a village where the answer to every question is "yes". Rather, be aware of the issues raised by our checklist and decide what's best for you.

Retirement villages checklist (47.2 KB)

The checklist is presented as a PDF document. To view this document you will need Adobe Acrobat Reader software installed on your computer. This is available free from Adobe.

Retirement village operators

OperatorsNumber of villages Base weekly fee range ($)Maximum deferred-management fee (%)Capital gain payable to resident?Capital loss paid by resident?Legal & marketing costs on re-sale?
Bupa Care2296 to 13128NoYesNo
MetlifecareA23B107 to 150D30NoYesNo
Oceania Group2769 to 14120 to 30 (depending on village)No NoResident pays operator's legal fees plus marketing costs of 1.5-2.5% of the original capital sum.
Ryman HealthcareA2599 to 12920No NoResident pays operator's legal fees.
Summerset GroupA15C99 to 13925ENoNoNo

Guide to the table: Our data is from villages’ websites and disclosure statements. Base weekly fee is for villas.

  • A = publicly listed company.
  • B = includes villages acquired in 2012 through merger with Private Life Care and Vision Senior Living.
  • C = includes 5 under development.
  • D = 1 village (“7 St Vincent” in Auckland) has a weekly fee of $262. Maximum deferred-management fee is a percentage of what you originally paid for the unit. This fee is phased in and the maximum usually applies after 3 to 5 years of residency.
  • E = maximum is 20 percent for care units.

Cracks in the code

The Canterbury earthquakes destroyed several retirement villages and exposed major cracks in the Retirement Villages Code of Practice. Provisions in the code meant residents weren't automatically entitled to get back what they'd paid for their unit because the operator was able to deduct deferred-management fees.

Changes that took effect in October 2013 will mean operators can no longer deduct these fees when an earthquake or other natural disaster strikes and the village won't be rebuilt. In future, residents will be entitled to get back their original capital – although it's unlikely this will be enough to buy into another village.


If the owner of a retirement village goes into receivership, protections in the Retirement Villages Act mean you can't be evicted - provided the village is properly registered. The Act gives residents priority ahead of the holders of any security interests. The retirement village effectively has to be sold as a going concern.

However, you may be living under a long cloud of financial uncertainty until a new buyer is found or the village trades its way out of trouble.

You can check if a village is registered by going to the Retirement Villages Register at www.companies.govt.nz.

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