Retirement Villages Act under scrutiny

Riverdeen Villages resident Derek Allan (left) with Brian Peat who was in Gisborne last week to talk about issues with the review of the Retirement Villages Act. Mr Peat is the president of the Retirement Villages Residents Association.Picture by Liam Clayton

Gisborne residents living in retirement villages have been asked to help put an end to “unfair” practices that in some cases involve some operators around New Zealand still collecting fees even when residents have died.

As part of a government review of the 20-year-old Retirement Villages Act, Retirement Villages Residents Association president Brian Peat was in Gisborne on Thursday to detail some of the major issues with the existing Act and encourage residents to fill in a questionnaire to provide evidence of why change is needed.

“The biggest issue is the pay-back period. When people move on or pass on, there is nothing in the current legislation that they will get their money back within a defined period.

“We are saying it should be 28 days from the time the key is handed in, until the resident or the estate gets the money.”

That would be in line with the Residential Tenancies Act, which requires bonds to be returned within 23 days.

“This is where we are miles apart from the operators.”

Mr Peat said operators claimed they could not afford to pay the money back in that time frame but he suggested they could if they established a sinking fund for that sole purpose.

Another issue was capital gains.

Referencing his own situation, he paid $390,000 to enter his current residence. He then loses five percent a year in a deferred management fee, which is part of the deal.

“Everyone understands that — it’s for the refurbishment when you move on  or pass on.”

The issue was around capital gains, as the price of a new resident to move in rises. That difference does not go to the resident when they move out, in most cases.

“Riverdeen Villages in Gisborne have one of the better business models for the industry. They certainly pay 30 percent capital gain to residents when they leave the village. This is one of the few operators who pay capital gain to exiting residents.”

Other issues needing to be changed included rules around salespeople, who at present, do not need any qualifications, as well as putting an

end to the practice of residents being charged for maintenance and repairs in facilities.

Another issue was the practice of operators charging residents for both rents and residential care/hospital stays

That was affectively double dipping, he said.

“All we are asking for is fairness, consumer protection and consistency.”

The Government has put out a 135-page survey on the review but the RVResidents Association has formulated a shorter six-page document with 24  questions, which is now live until a deadline of October 20, while the full government document is open until November 20.

Mr Peat spoke to retirement village residents and families at six venues in Gisborne last week.

The questionnaire can be found here: https://tinyurl.com/mc7yseyk