KEY POINTS:
The retirement village industry is in limbo - with no over-riding set of guidelines - after the High Court last week threw out a new code of practice for the sector.
The 250-member Retirement Village Association - representing about 85 per cent of New Zealand's retirement villages - had approached the Government seeking an industry-wide code of practice.
The association's own voluntary code was effectively accepted by the Government as the industry standard, but the association went to the High Court with concerns about aspects added to the new code that could be applied retrospectively.
These included a "fair wear and tear" clause in unit refurbishment rules, which could have cost the industry up to $80 million.
Retirement village residents usually pay a lump sum to live in a unit, a percentage of which is refunded at the end of a tenancy.
But the new code stipulated that when a resident moved out, the unit was to be refurbished to no more than the original condition, less fair wear and tear.
Association executive director John Collyns told the Weekend Herald the association objected to the clause, as it could be applied retrospectively, potentially saddling village owners with millions in costs - such as carpet cleaning - that could not be passed on to departing tenants.
Justice Simon France threw out the new code, ruling that the exclusion of fair wear and tear from refurbishment costs represented a change from current contracts under most existing occupancy agreements.
"The plaintiff has estimated, for example, that the fair wear and tear change imposed by the code, on its own, will cost members $80 million," the judge said.
Justice France said the act authorised the code to alter existing contractual arrangements between residents and operators.
Mr Collyns said the association would meet Department of Building and Housing officials early in the new year to thrash out new guidelines.
The Weekend Herald sought comment from the department but it did not respond.
- David Eames
