No. 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.

An Occupation Right Agreement (ORA) is the name of the legal contract between the retirement village and a resident. The ORA sets out payment information, the disputes process and termination rights. It is important that you work through your ORA with your lawyer and ensure you understand each part of the agreement prior to signing.

Yes. The Retirement Villages Act of 2003, and its regulations, are designed to protect residents’ interests and set out basic standards for operating a village. These include disclosure of information to intending and existing residents, protections around residents’ financial interests, the details of termination arrangements, the relationship between the owner (the village), resident, and manager including the methods of dispute resolution, and resident’s rights.

It is a requirement of the Retirement Villages Act 2003 that each new resident receives legal advice to ensure they understand the Occupation Right Agreement (plus accompanying documentation) prior to signing. The lawyer is required to witness the resident’s signature after clearly explaining all content of the agreement.

All villages are different, however most have a common set of costs. The amounts for each of these costs varies between villages, and sometimes by individual units within a village.

First, there is a purchase price or entry fee, which gives the resident the right to live in the property for their lifetime or as long as they choose. Second, when the resident leaves the village, they will receive the cost paid (entry fee) minus the deferred management fee and any other outstanding costs due at that time. The deferred management fee (also known as an amenities fee) is usually around 30% of the purchase price (it varies from village to village and may be more or less) and it represents a contribution towards the provision of accommodation and communal village facilities and buildings. Third, residents also usually pay a village weekly fee, usually monthly in advance, which is calculated as a proportion of the cost of the village outgoings. This fee usually includes costs such as rates, insurance, rubbish collection, security patrols, lawn & garden maintenance, but will vary by facility. It is also important to note that the village retains any capital gains in the property.

There are many differences between villages, and each village's occupation right agreement needs to be understood to ensure you know what these differences are. For instance:

• Weekly fees – some village's weekly fees are fixed, others may increase their fees based on the percentage increase of New Zealand’s superannuation each year, whereas others only increase fees if the village's operating costs go up e.g. if rates or insurance costs of the village are increased.
• Capital gains/losses - it is recommended that you speak with the village manager or sales consultant to make sure you have a clear understanding of the contractual details surrounding capital gains and losses. This information can also be found in the village's most recent ‘disclosure statement’ which is listed on the New Zealand Companies Office website. We can also advise you on this.
• Deferred Management Fee – this is a percentage of the price that you paid to enter the village and is usually capped between 25 – 35% but varies between villages.
• Fees on exit - whether residents will be required to continue to pay the weekly fee once they leave the village, and for how long, differs depending on the village. It is important that you ask the village manger or sales representative this question so there aren’t any unplanned financial costs once you leave. Refurbishment requirements, and who bears the costs of these, should also be raised.
• On-going care – possible future residential care needs (rest home care, long term care hospital, dementia care, and psycho-geriatric care) should also be considered. Some villages provide all the levels of care and some do not.
• Visitors – what are the rules around friends and family being able to stay and use the village facilities? Each village may have a slightly different policy around this so make sure you check with the village manager.
• Pets - most villages will allow small well-behaved pets in the village as long as it is agreed to by the village manager first. However, this is not the case for all villages, and some will have a 'no pets' policy so it is important you ask this question.