Consumer NZ urges action on ‘unfair’ retirement village repayment timeframe
Wednesday, 22 April 2026
Proposed changes to how quickly retirement village operators must repay capital to residents who move out of a village are “manifestly unfair”, and most New Zealanders would agree, Consumer NZ says.
That’s why the consumer watchdog has launched a petition asking people to back a call for residents to get their money back within three months of ending their occupation rights agreement (ORA) at a village.
Consumer NZ chief executive Jon Duffy said residents or their families could be left in financial dire straits when they had to wait too long to get their own money back.
“There is currently no obligation for villages to repay money until a unit is relicensed. That needs to be fixed.”
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While Associate Minister for Housing Tama Potaka announced reforms to the Retirement Villages Act in December, resident advocates claim the proposed repayment timeframe is inequitable.
Under the new legislation village operators will have 12 months to repay a resident’s money, but interest will be paid after six months if their former unit has not been resold.
There will also be a process where former residents can apply for early access to funds in situations of specific need.
The changes will only apply to new contracts entered into following the passing of the law. That means they will not apply to current residents.
Duffy said the changes were “manifestly unfair” to residents, particularly existing ones, and benefited village operators.
“We appreciate there are commercial realities involved in running a village, and operators may not be able to immediately get their hands on the funds to fully pay a resident out when they exit a village.
“But often people are exiting a village because they are going into a higher level of aged care, or hospital care, and the money is desperately needed.
“A particularly galling aspect of the proposed changes is that they won’t apply to current residents, so the people who have been doing the hard mahi for this won’t get to see the benefits.”
Consumer was aware of operators who did pay out the funds quite quickly when residents exited, and that showed the model had the capacity to do so, he said.
“It tends to be smaller operators who have less access to capital that struggle with repayment times, but that does not make it fairer from our point of view.”
The Government and HUD had recognised there was a problem, and have said time limits should be imposed, but they had buckled to lobbying from the industry in setting a 12-month time frame, he said.
“We think a fair timeframe is three months, which is equivalent to some jurisdictions in Australia, and we are also campaigning for an interim repayment of 10% or $50,000 within five working days of an agreement ending.”
Duffy said Consumer research found that 83% of New Zealanders believed residents should get their money back within three months or less.
The petition would run for a month and they were aiming for 65,000 signatures, and it would flow through into the organisation’s submission to the Select Committee on the reforms, he said.
“That’s one of our reasons for doing this. It makes the argument we are putting to the Select Committee more compelling if we can say tens of thousands of New Zealanders have signed this petition.”
Labour MP Ingrid Leary currently has a member’s bill in the ballot which proposes legislating a three-month repayment timeframe, and Duffy said they supported the bill.
“It needs to be pulled out of the ballot though, and this shouldn’t be left up to chance. The Government has the option to do the right thing, so they need to see evidence to counter industry arguments.”
Retirement Village Residents’ Association president Brian Peat acknowledged that after a long campaign by residents for law reform the Government had come forward with a proposition.
But the association, which has 11,000 members, did not think the 12-month repayment time was acceptable, and nor was the plan for it to apply only to new residents, and not existing residents, he said.
“It will create a two-tier system where new residents will get the benefits of the legislation, while those who have been working for change for years won’t.
“The Government says they can’t address it retrospectively, but they’ve done so in new provisions around deferred maintenance and repairs, and weekly fees stopping on exit which apply to existing and new residents.”
He believed the Government was reluctant to upset operators, yet about 56,000 residents would be affected by the proposal to exclude existing residents from the repayment changes, he said.
“We are blown away by the inconsistent approach, and when we talk to people in villages about the legislation as it stands they are stunned, and don’t understand why this has been done.”
But Retirement Villages’ Association executive director Michelle Palmer said imposing a mandatory three-month repayment period would place unsustainable financial pressure on many operators.
It would destroy smaller providers and have a chilling effect on the future development of retirement villages and care beds, she said.
“It is concerning to see a reckless proposal like this being promoted and reflects a basic lack of understanding as to how retirement villages work.”
A vacated unit required refurbishment before it could be marketed, sold and settled, and settlement often depended on an incoming resident first selling their own home, she said.
“Suggesting this entire process can consistently be completed within three months is not realistic. Under Consumer NZ’s proposal, operators would be required to repay residents or their estates before new funds are received.
“That fundamentally changes the model. In virtually every case, operators would need to secure significant bank funding or large lines of credit to bridge that gap.”
Palmer said indicative modelling of a sample of villages using sector data from the past two years showed a three-month repayment requirement would require hundreds of millions of dollars in additional capital.
“The impact would be immediate and severe, particularly for smaller operators, with many villages becoming insolvent, ultimately putting all residents in those villages at risk of ever being repaid.
“Retirement villages do not hold large reserves of idle cash. Funds from initial unit sales are used to cover the cost of land, construction, shared facilities and care infrastructure.”
Operators were already strongly incentivised to resell units quickly, as no return was generated until a new resident moved in, she said.