Dying for a payout ‒ a David vs Goliath battle

Saturday, 21 June 2025

When John and his wife had to leave their retirement villa for rest home care, they assumed they could do so together.

Instead, the couple, both in their 90s, were separated into different care rooms and charged separately.

At the same time, the original village continued billing John $617 a month in fees for a villa he no longer lived in.

John’s wife, Mary, died shortly after they arrived at the rest home.

The villa sat empty for many more months in an uninhabitable state. No effort was made to repaint, install heating or even sort the carpets.

From his rest home bed, John faced having to borrow money to pay for his care.

It’s a familiar story. On the one hand, a resident who for whatever reason has had to move out of the home they paid upfront to live in; on the other, a retirement village operator who may well have used that capital to repay debt and isn’t keen to hand it back until the unit has been on-sold or re-licensed.

The issue has been a point of contention between operators and residents’ advocates for years. It boils down to the use of occupational rights agreements (ORAs).

An ORA gives a person buying into a retirement village the right to live in a unit. When they leave, possibly to move into a rest home or on their death, they or their estate gets back the capital originally paid, less a deferred management fee which is usually around 30%.

The problem arises because operators are able to keep that money (interest free) and continue charging fees until the vacant unit is re-licensed to a new resident, that resident has signed their ORA, and they have settled their entry payment.

That can take months ‒ the average is five-and-a-half ‒ creating huge financial strain for families, especially if there are outstanding debts or funeral costs that need to be settled.

In John’s case, he did did eventually get his money back and the operators stopped charging him weekly fees ‒ but only after the Retirement Village Residents Association (RVRA) got involved and a seven-month wait.

“When I next visited John he said, ‘we have beaten the buggers, Brian. I got my money back’,” says RVRA President Brian Peat says.

John died that night.

As New Zealand’s population ages ‒ projections are that by 2040, one in four Kiwis will be aged over 65 ‒ there has been increased scrutiny of how retirement villages are operated.

It is estimated that more than 53,000 people live in retirement villages. The industry forecasts that close to 113,000 retirees will be wanting to live in this type of accommodation by 2048.

Calls to improve practices have come from Consumer NZ and the Commerce Commission, which last year warned 12 operators some of their care claims and contract terms risked breaching the Fair Trading Act.

Four years ago, 12,500 people added their signatures to a petition seeking a review of the two-decades old Retirement Villages Act to address the many perceived imbalances.

That review is now under way. Led by the Ministry of Housing and Development (HUD) it will look at options for incentivising or requiring capital repayments when residents move out of a village, maintenance and repairs of operator-owned chattels and fixtures and complaints and disputes. The discussion paper attracted 11,000 responses.

Four briefings have gone to Associate Housing Minister Tama Potaka in recent months He will seek Cabinet agreement to legislative changes towards the end of the year, with the drafting process beginning early 2026 followed by an amendment Bill being introduced mid-year.

Peat remains sceptical, as does Labour’s spokesperson for Seniors Ingrid Leary, who has stepped into what she considers a “grossly unfair” David versus Goliath battle.

While the RVRA and its nemesis agree on several aspects related to the review of the Act, Peat says mandatory time frames for capital repayments remain the “elephant in the room”, as does Potaka’s references to using interest payments to incentivise operators.

“It doesn’t incentivise. It just gives the operator a low interest line of credit and it’s of no benefit to a resident who needs the money to move into care or to be closer to family if their situation changes.”

Residents are pushing for the balance of the refundable amount to be paid within four months from notice, or three months from vacant possession, whichever is later.

Peat, who believes around 50% of residents rely solely on superannuation, is also concerned about the length of time the review is taking. While HUD staff resourcing has been increased (by 1.5 FTEs) to shave eight months off the time frame, Peat says more than 30,000 residents will have died or exited village units without the necessary protections since the association began asking for it.

Leary has drafted a member’s bill that would force operators to repay capital sums within three months of someone exiting the village or moving between units or levels of care within a village. The first 10% would need to be repaid within five working days.

“It’s about giving village residents sovereignty over their own funds. I have 18 retirement villages in my electorate, and at every one I have visited this has been an issue.

“What signal does that send to our seniors who should be valued and respected, not kicked to the kerb by a system that currently seems to put corporate profit above everything and everyone else?

“The current law is just crying out for change.”

Retirement Village Association (RVA) president Graham Wilkinson, who operates six villages, is not convinced changes are needed, arguing the situation is comparable to someone putting a house on the market.

“The reality is the reason it’s become an issue is the real estate market. Have you tried to sell a house in Auckland? People are just giving up … the real culprit in terms of causing extra angst is the slow real estate market.

“People calling for mandatory repayment are the same people who took three, four, six months, sometimes, to sell their house, to move to the village. And yet now, now they expect everyone to suddenly, miraculously, do it in days. It doesn't really make sense.”

Mandatory repayments would require operators to hold large credit lines, which in turn would mean residents paying higher fees. There is also probate to deal with, which often takes months.

“And remember, when people go in they know it’s a resident-funded village.You have compulsory legal advice, your lawyer has to sign the form to say you understand all the terms.”

Operators don’t have “great cash reserves just sitting around”, with retirement villages being long-term investments that didn’t pay dividends for years.

Leary has little sympathy: “They can plead poverty because they're using the equity to expand their operation.Yes, there is a public benefit to expanding retirement villages, because we do have a growing need for them.”

Peat suggests a process such as that used by tenants and landlords where a bond is placed in a government agency’s trust account and paid out on exit of the rented property could work.

He cites New South Wales as being a successful example of mandatory repayment requirements. “For the last 26 years they’ve had a time frame of six months. There’s not one operator that has failed, not one. So if they can do it in six months, then our guys can do it.”

Leary has written to MPS across the House and to NZ First leader Winston Peters asking for support for her Bill, which if agreed to would see it bypass the usual ballot instead going to the Justice Committee.

The Post understands a decision on support could come as soon as next week.

A flood of excuses

When Helen Thomassen’s mum Jill Bridgman died in July last year she expected the Auckland retirement village would return the money she had paid for her apartment reasonably quickly.

Instead, the grieving daughter faced months of excuses and “bullshit”, after being told the payout depended on insurance funds from the January 2023 floods.

Unhappy at the delay Helen went digging.

“They kept saying they couldn’t make a payout until the insurance money comes through. I just thought, ‘hang on, this is a bit weird’. And then I found out they had been paid months before, even before mum passed.”

It transpired the operator had received a $14.9 million payment in September 2023 as compensation for flood damage, although they were still waiting for compensation for “loss of business”.

Thomassen threatened legal action. The money was repaid ‒ eight months after her mum’s death.

“My mother’s memory deserved better.”

* John and Mary’s surnames are withheld to protect their privacy