Considering Retirement Village living? Here are some basics you should know.
The Retirement Villages Act 2003 was introduced particularly to protect the interests of residents and intending residents of retirement villages.
About three-quarters of New Zealand’s retirement villages offer licences to occupy, also known as a right to occupy or occupation licence. This type of arrangement is very different from your usual home ownership.
An occupation licence is a personal right only. You do not own the property, but you have a contractual right to occupy that dwelling. Unlike normal property ownership, you are not able to mortgage the property, and you cannot rent the property.
Entering a retirement village should be a lifestyle choice, not an investment. You do not usually receive any capital gain and will generally not get back what you paid for the unit. This is because a ’deferred management fee’ applies. This is a term to describe the amount deducted by the village when your occupancy ends and your right to occupy is purchased by another resident. The amount is generally a percentage of the purchase price multiplied by the number of years you have occupied your unit. It is typically capped at between 20-30%. You will also pay a weekly or monthly fee for outgoings, which some retirement villages fix so it always remains the same, while other retirement villages do not.
You will need to have a lawyer to enter into a retirement village as prior to entering into the agreement a lawyer needs to certify that they have explained all the terms of the agreement to you, and that you understand these and have entered into the agreement accordingly.
All villages have age restrictions. You usually need to be 55 years or older (in some cases 75 years) to apply. As the unit is for your personal use and occupation, you may have friends or relatives stay but not long-term guests. You are only allowed to alter the structure of the unit with the operator’s consent and usually only if you develop disabilities. Some allow pets but this also usually requires the consent of the village operator.
Finally, most villages require you to have enduring powers of attorney for both property and personal care and welfare to enable someone to manage your affairs if you cannot, and to have an up to date will, which your lawyer will also be able to assist you with.
