Retirement village residents have less protection than tenants — retirement commissioner calls for urgent law reform
Tuesday, 8 June 2021
Retirement village residents have much less consumer protection than tenants in New Zealand, according to the Retirement Commissioner Jane Wrightson.
That’s one of the findings of Wrightson’s report released on Wednesday calling for an urgent Government review of the almost 20-year-old law and regulations governing the growing retirement village industry.
Her report said the balance of power between operators and residents needed addressing and residents’ rights needed to be made a lot clearer and strengthened.
Contracts contained unfair terms, residents entering villages needed clearer information, standard and plain English contracts for occupation rights agreements should be introduced, and a simple and effective complaints system needed to be created.
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Minimum standards should be set for key exit matters like weekly fees continuing after the death of a resident and when they should stop, and how long operators were allowed before they had to buy-back the licences to occupy a unit and repay residents or their estates.
It comes after she released a discussion paper in December placing several contentious issues up for debate, which attracted nearly 3300 submissions including hundreds from village residents.
These proposals included sharing the capital gain when the right to occupy the units or villas, as they are called, were resold, restricting how long weekly fees could be charged once a resident died or left a villa and a guaranteed buy-back of the licence to occupy within a certain time.
Her report said submissions revealed 99 per cent support for a complete review of the legislative framework and that included support from organisations like the Law Society, and professionals in the sector like trustees and statutory supervisors, as well as hundreds of residents’ submissions.
Wrightson told said the only group that thought a full review was a bad idea was the operators.
Village residents did not have many of the consumer protections provided to tenants here. A review should eliminate unfair terms in contracts and better protect the rights of consumers.
While sharing the capital gain was the most hotly debated issue, if that was “off the table” the issues boiled down to the rights of residents who were neither tenants nor owners of the units, she said.
That was one of the main reasons the retirement villages framework needed to be reviewed and made “crystal clear”. If residents had owners’ rights, they could share in capital gains. If they had tenancy rights, they would have more rights than they had now, she said.
Asked if she personally supported capital gains sharing, Wrightson said it was more important to be utterly transparent and give consumers options.
“The operators are busily obsessing about capital gains … I don’t have a strong view one way or the other. What I want to see is a framework that is fair and is based on good consumer principles and that doesn’t put the operators out of business.”
The retirement village sector was healthy and a good option for some people who had the means, but the framework was designed 20 years ago and the industry was “very lightly-regulated”.
The report has gone to the Associate Housing Minister Poto Williams to decide whether to set up a review. Wrightson said the issues were largely consumer and financial and not really public housing issues.
Kapiti Coast village resident Brian Colegate said it had not occurred to him that he had less consumer rights as a village resident than a tenant had.
Colegate published a book last year on going into a retirement village. In talking to residents as research for his book he recalled that people talked about needing a better complaints system.
The village system was couched in favour of the operator, but people had to go in with their eyes open. Once you were in a village you could only get out at an “immense cost”, Colegate said.
Auckland retirement village resident Ian Robinson said he supported the recommendations of the retirement commissioner.
A complete review of the Retirement Villages Act and the Code of Practice was needed because they were weighted in favour of the owners. Robinson, 87, is a resident of Knightsbridge Village, owned by Arena Living, which is owned by United States investment firm Blackstone.
“The act does need reviewing and urgently,” Robinson said.
The Retirement Villages Association representing operators labelled Wrightson’s call for an urgent review as unnecessary and excessive.
The retirement commissioner should focus on working with the industry on a series of improvements already underway, executive director of the association John Collyns said.
These were providing strengthening the complaints process, exploring the establishment of an ombudsman to hear and resolve issues, fixing potentially unfair clauses and working with the commission to develop best practice standards for relicensing times, Collyns said.
While 1900 Retirement Village Residents’ Association members lodged submissions they were only 5 per cent of the 45,000 people living in retirement villages. Independent research showed 95 per cent were satisfied with living in a retirement village, Collyns said.
That suggested villages were meeting the expectations of the vast majority of residents.
Residents’ association spokesman Peter Carr said Wrightson’s independent view that a major change to the act and related regulations and code were well overdue aligned exactly with the views of the residents’ association.
Elderly people in their twilight years being exploited by operators only intent on huge profits and unfair financial practices was an “oft repeated sad reality”, Carr said.