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Resources and FAQ for Village living

Posted on : Apr 08, 2024

Frequently Asked Questions: The answers you need

Do you know your LTO from your ORA? Retirement Village living invites a whole world of new acronyms and questions which could flummox even the best of us! Below we break down the terminology.

 

What is the Retirement Commission?
This is an organisation focused on helping retirees with the financial and legal obligations of entering into a retirement village.
 
What is a Code of Practice (COP)?
This refers to a legal document that sits under the Retirement Villages Act 2003 called the ‘Retirement Villages Code of Practice 2008’ which sets out the minimum requirements that operators of a village must carry out to meet their legal obligations.
This might cover areas such as:
 
  • Staff qualifications and training
  • Safety and security
  • Fire and emergency procedures
  • Frequency of residents’ meetings and residents’ participation in decision making
  • How the complaints process is conducted
  • What should happen upon termination of an occupation right agreement
 
What does Deferred Management Fee (DMF) mean?
This is a cost paid after a resident leaves or terminates their unit in a village. Under a licence to occupy, it’s common for a retirement village operator to retain between 20-30% of your initial capital sum. A DMF covers the long-term costs of residing at the village, such as maintenance of facilities and communal areas, and the re-licensing and refurbishment of your property after the licence ends.
 
What is a Disclosure Statement?
This document must be provided to an intending resident and normally accompanies an ORA. In the disclosure statement, you’ll find information about:
 
  • The village’s ownership and management structure
  • Statutory supervision arrangements
  • Charges/fees associated with living in the village
  • An estimate of what you would receive if you left the village after two, five or ten years
  • The village’s community facilities and services, including what provision is made for maintenance at the village
 
The disclosure statement should also outline any plans for the development of the village including the building of new units (and the effect of this on existing residents), as well as any conditions and restrictions on the sale of units, and the time it has taken to sell vacant units over the past 12 months.
 
What is a Licence to Occupy (LTO)?
While this licence gives you legal access to live in the unit or home you will move into, it doesn’t give you ownership of this space. 

 

What does MHUD stand for?
Ministry of Housing and Urban Development read more here: www.hud.govt.nz
 
Can you explain what an Occupation Right Agreement (ORA) is?
This refers to the contract you sign with a village operator before you move in. It sets out the terms of your occupation, including your rights and obligations, and those of the operator. In New Zealand, every intending resident is required by law to seek legal advice prior to signing an ORA (under the Retirement Villages Act 2003).
 
What does the Registrar of Retirement Villages (RORV) do?
The Registrar of Retirement Villages is responsible for the registration of retirement villages and the maintenance of the Retirement Villages Register.
 
What is the Retirement Villages Association (RVA)?
The Retirement Villages Association of New Zealand Inc (RVA) is a voluntary, nationally-based membership association representing operators, developers and managers of retirement villages throughout New Zealand.
 
What does the Retirement Village Residents Association of New Zealand (AKA RVR or RVResidents) do?
A national membership body representing residents living in retirement villages. The RVR was formed to help ensure residents enjoy the full benefits of retirement village life. They help promote and protect the rights of retirement village residents in New Zealand and provide a voice for residents at both a local and national level.
 
How much does it cost to live in a retirement village?
There is no standard answer to this. The cost of a retirement village depends on entry costs, fee structures and property types. Visit the website of the village you are interested in, or place a call to their sales manager to request an information pack which would include the expected costs for that village.
 
What are the entry fees in a retirement village?
To buy into a village, you’re typically required to pay a deposit and a capital sum for an occupation right agreement (ORA). The most common legal title under an ORA is a licence to occupy, which gives you a contractual right to live in a specific property within a village, but no legal ownership of the property itself or the land.
 
What do retirement village weekly fees cover and can they be increased?
Weekly fees are designed to cover day-to-day operating costs such as rates, insurance, grounds maintenance, staff wages and village services. The fee amount (and what’s included) will vary from village to village, and fees may increase over time. Some may remain the same during your entire occupancy and these are generally marketed as fixed fees.
 
What do I pay for myself when living in a retirement village?
These vary between villages, however in most cases, you will be required to pay separately for things like contents insurance, phone & internet, household power, and any additional services you choose.
Some of these costs may be covered in the fee if you live in a serviced apartment. Be sure to ask the village sales manager for a full breakdown of inclusions and exclusions by property type.
 
What is the reason for exit fees?
Exit costs can depend on the circumstances in which you leave the property - like whether you leave the village altogether or transfer to a different property within the village.
Look out for:
 
  • Deferred management fee. If you leave the village, the deferred management fee will be deducted from the capital sum you receive when the operator re-licenses your unit. If you transfer to another property in the village, it’s important to ask the sales manager how your deferred management fee will be treated.
  • Ongoing weekly or periodic fees. Your occupation right agreement will set out whether weekly fees cease when you provide vacant possession or continue until your unit is re-licensed. If the fees continue, the operator must reduce them by at least 50% by the later of either:
    • The date you stop living in the unit (and remove all your possessions) or
    • Six months after the date your licence to occupy terminates.
 
Is it possible to rent in a retirement village?
Some villages do offer rental units, you’ll find most village rental agreements are residential tenancy agreements. The majority of retirement villages sell units on a licence to occupy, which means you purchase the contractual right to occupy a property, but you have no legal ownership of the property itself or the land. 
 
Could a retirement villages offer unit titles?
While not the most common option, some retirement villages in New Zealand do offer unit titles to residents. This means you would own the property and have more control over its sale and potential capital gains compared to other ownership structures like a licence to occupy. Villages that offer unit titles also tend to have a lower age-of-entry, usually between 50 and 60 years of age. The specific ownership terms for unit titles can vary from village to village.
 
I want to receive capital gain when I leave a retirement village, is this possible?
It’s unlikely for residents to receive any capital gains or bear any capital losses on the re-licensing of a property within a retirement village in New Zealand. More commonly, capital gains and capital losses will be received or absorbed by the operator.
 
How would I expect insurance to work in a retirement village?
Code of Practice stipulates that a village operator must maintain a comprehensive insurance policy to cover loss or damage caused by fire, accident or natural disaster. This policy must cover retirement village property, capital improvements or additional fittings provided by residents, and residential units owned by residents. The insurance must cover full replacement (if available). If full replacement insurance isn’t available, indemnity insurance is permitted, and the operator must clearly communicate what cover is provided.
 
If I’m not fully retired yet, could I still live in a retirement village?
It is unlikely that ‘being retired’ will be an entry requirement, and some retirement villages have residents who are still working either full or part-time. It would be a good idea to speak directly with the village or sales manager of any village you are interested in to find out more about their entry criteria.
 
How old do I need to be to move into a retirement village?
Each village has its own criteria for becoming a resident. Usually, retirement villages will have an entrance age of either 70 or 75 years, however some allow entry at 65 or even 60 years. There may be some flexibility depending on which village you choose to look into.
 
Can I bring my pets with me if I choose to move into a retirement village?
You will find most villages allow small pets, providing they won’t disturb neighbouring residents (e.g., a dog that barks). Pets are usually considered on a case-by-case basis and accepted at the manager’s discretion. The majority allow small pets on a case-by-case basis, considering factors like the animal's type, size, and temperament. The final decision often rests with the village manager, who will need to ensure pets don't disturb other residents. Check with the specific villages you're interested in to understand their pet policies and any limitations they might have. Keep in mind you will need to be prepared to discuss your pet's age, health, and behaviour, while some villages may require pets to be desexed, vaccinated, and microchipped.
 
What happens when I leave a retirement village?
The leaving process varies from village to village and will be outlined in the occupation right agreement. In most cases, you will receive your exit payment once the unit has been re-licensed. Depending on when you leave, you might need to pay the full deferred management fee (or a portion of it) and any outstanding charges associated with your account. You may also need to pay fees associated with re-licencing your unit, like admin, legal or marketing costs. Check with the sales manager whether these costs are included within your deferred management fee or charged separately.
 
Who looks after the sales process if I leave my retirement village?
It’s usually the operator’s responsibility to sell the licence to occupy for the vacant unit. Every village has a slightly different sales process, which should be clearly outlined in the occupation right agreement.
 
How would a vacant retirement village unit be marketed?
The operator must “take proper steps to market the residential unit” and consult with the former resident about the marketing process, which includes when the unit goes up for sale, the “general nature of the marketing plan”, and any changes relating to the marketing and sale of the residential unit. The operator needs to update the former resident on the progress of marketing on a monthly basis.
 
Do village residents continue to pay weekly fees while their unit is on the market?
The resident’s occupation right agreement will include whether weekly fees end when the resident provides vacant possession, or if they continue through until the residential unit is sold. If the latter, then the operator of the village must reduce any outgoing fees by at least 50% by the later of either the date the resident stops living in the unit (and removes all their possessions) or six months after the date that the former resident’s occupation licence terminates. All fees for personal services must end as soon as a resident stops living permanently in the unit.
 
When would I receive my exit payment after leaving a retirement village?
Once the licence to occupy is sold, the operator must pay the former resident all money owing to them under their occupation right agreement within five working days of receiving payment in full from the new resident. This is subject to the new resident’s cooling off period having expired. Also, if the former resident has died, probate will be required before payment can be made. Note that some operators agree to pay out earlier or pay interest after a certain period.
 
What happens if my retirement village unit doesn’t sell quickly?
Every village will follow a slightly different process for selling vacant units. However, villages must adhere to the guidelines for selling vacant units outlined in the Retirement Villages Code of Practice 2008 (clause 51).
After three months - If a new occupation right agreement has not been entered into within three months, the operator must report in writing to the former resident, and provide detailed monthly updates from then on. The monthly reports must clearly outline the steps the operator is taking to market the unit.
After six months - If the unit is still vacant after six months, the operator must get an independent valuation of the unit (at their expense) to make sure the asking price is a suitable price. The former resident may also obtain an independent valuation (at their own cost) if they feel the first valuation is inaccurate and the operator must consider this when determining a suitable price.
After nine months - If an occupation right has not been sold for the unit after nine months, the former resident may choose to take a dispute notice to the Retirement Villages Disputes Panel, if grounds for a dispute have arisen.
Former residents may make a complaint about the sales process at any time
 
What sorts of rules do retirement villages have?
Each retirement village will have its own set of rules to ensure everyone can live together harmoniously. These rules typically address aspects like conduct and behaviour which may cover expectations around noise levels, guest policies, and respectful interactions. You’d also find rules pertaining to use of facilities - outlining guidelines for using common areas, maintaining your unit, and adhering to safety regulations. Please ask the sales manager for more details.
 
Can my friends and family stay with me at my retirement village?
Most villages allow for friends and family to stay (and actively encourage it), but visitor policies vary from village to village. Check with the sales manager about their policy towards visiting friends and family.
 
What happens if I need a higher level of care after moving into a retirement village?
Most retirement villages offer a continuum of care, meaning there will be clear healthcare pathways available if needed. If the village has an on-site care home, a higher level of care will usually be provided there. For villages without an on-site care home, ask the sales manager if there is a nearby care home where residents will receive priority access.
 
Can I move to a different home within my retirement village?
It’s not unusual for a resident to change homes within a village, eg from a villa to a serviced apartment. The cost for the move will depend on when the change happens, as well as other factors unique to your village and the property types available.
 
Are retirement villages a good low-maintenance living choice?
Homes in retirement villages are built especially for retirees, meaning they are almost always low maintenance. No matter if you choose to live in a villa, townhouse or apartment, you’ll be able to spend more time doing what you enjoy, and less time maintaining your property.
 
What about community spirit?
Most retirement villages have a warm and welcoming community. You will likely live alongside like-minded neighbours and make new friends. Many villages coordinate voluntary social activities to encourage neighbourly bonds, such as group outings, quiz nights, and hobby groups.
 
Do retirement villages offer good security?
Although the level of security differs between villages, most have good on-site security, like monitored cameras or on-site security guards. Check with the sales manager for details.
 
What facilities could I reasonably expect a retirement village to offer?
Nearly all retirement villages have a communal TV and dining area, while others have additional facilities such as swimming pools, gyms, and hair salons. What is available will differ from village to village, so it’s important to ‘shop around’ to find a village that ticks all the right boxes for your lifestyle.
 
What healthcare services do retirement villages offer?
Around 65% of retirement villages have an on-site care home. You may be able to request medical assistance from care home staff if needed. Healthcare services at villages vary widely, but it wouldn’t be out of the question to expect your village to have contracted health practitioners at hand, including registered nurses, physiotherapists, and podiatrists.
 
What does a retirement villages residents' committee do?
The main role of the residents' committee is to represent the interests of residents by acting as the communication channel between them and management.
This might include:
 
  • Calling a meeting with the operator or its representative. The operator or its representative is expected to attend residents’ committee meetings when invited, unless the request is in some way unreasonable (e.g., too short a period of notice).
  • If the village has a statutory supervisor the residents’ committee may call a meeting with the statutory supervisor. The statutory supervisor is expected to attend residents’ committee meetings when invited, unless the request is in some way unreasonable (e.g., too short a period of notice).
The village operator is required to adhere to the above as outlined in the Code of Practice 2008.
 
Do retirement villages have emergency push-buttons?
Most retirement villages have emergency call buttons in every property and common area or provide pedants for residents to wear. These push buttons/pedants are usually monitored 24/7 by trained responders.
 
Do retirement villages have a complaints process?
Yes, as outlined in Retirement Village Act 2003, all registered New Zealand villages must have a complaints process which is made known to residents.
 
What is the Retirement Villages Act 2003?
The Retirement Village Act 2003 is intended to look after the rights of both potential and current residence. The Act places control over how retirement villages are run with regulations that must be adhered to. The Act makes provision for:
 
  • Registration of retirement villages
  • Occupation right agreements between operators and residents
  • The Retirement Villages Code of Practice
  • The Code of Residents' Rights
  • A complaints facility
  • A disputes resolution process

 

What is the Retirement Villages Code of Practice?
The Retirement Villages Code of Practice 2008 sets out the minimum requirements that operators of a retirement village must carry out to meet their legal obligations in New Zealand.
This covers:
 
  • Staff qualifications and training
  • Safety and security
  • Fire and emergency procedures
  • Frequency of residents’ meetings and residents’ participation in decision making
  • How the complaints process is conducted
  • What should happen upon termination of an occupation right agreement
 
What is the ‘Code of Residents Rights’?
The Code of Residents’ Rights set out the general terms of respect and care that the Retirement Villages Act provides for all residents. Some examples of the rights are:
 
  • The right to services and other benefits as detailed in the occupation right agreement
  • The right to information about matters that could affect your residency
  • The right to be consulted about potential changes to services, benefits and charges
  • The right to complain and receive a timely response
  • The right to a speedy and efficient process for resolving disputes, and to use a support person when dealing with the operator or other residents of the village
  • The right to be treated with courtesy and not to be exploited

 

 

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