Betting the house: Are retirement villages looting NZers’ golden years?
The sunny faces of the smiling seniors you see on the ads for retirement villages are not stock images posed by models or actors. They are real people in real places playing real pétanque, according to Adam Yates, owner and chief executive of Karaka Pines Villages. “All the images you see on TV are genuine. People are genuinely excited and happy.” Indeed, surveys show satisfaction levels among village residents consistently around the 90% mark.
“The camaraderie in the villages is second to none,” says Yates. “When people have that environment, and they have all the maintenance and stuff looked after, and then just have freedom to enjoy their living, it’s tremendous. I have no trouble saying you should move into a retirement village because they are just great places.”
And yet, last year, the Ministry of Housing and Urban Development – Te Tūāpapa Kura Kāinga launched the first review of the Retirement Village Act 2003. Its discussion paper identified 35 “issues” with the industry, along with suggestions for how they could be “addressed”.
A ministry spokesperson said it is now assessing the submissions received on options for changing the act and will provide Housing Minister Chris Bishop with advice later this year. “The minister will need cabinet agreement for any policy changes ahead of an amendment bill being drafted, introduced into Parliament and referred to a select committee. A timeframe for this has not yet been confirmed.”
It’s possible many people now in retirement villages will not live to see the outcome.
Village visits
The village landscape is an increasingly diverse one – from charitable establishments providing housing for the near indigent to the likes of the multimillion-dollar apartments in The Foundation (see Show them the money below). And plenty in between.
As president of the Retirement Village Residents Association, Brian Peat represents one group of stakeholders. He has set a goal of visiting every village in the country and made it to 192 of the 450 or so facilities so far and spoken to residents. He says the satisfaction surveys don’t tell the whole story because “older people do not complain. There was not one village where people haven’t come up to me after the meeting and said, ‘Oh, Brian, I’d hate to mention this to the manager, but I’ll just talk to you.’”
At present, any issues do not affect a huge number of people. The total village population numbered just 51,000 in August. But, according to figures from the Retirement Villages Association of New Zealand, between now and 2043, the number of people aged 75 and over will almost double. Demand is growing, and so, too, will any problems in the way villages are organised unless steps are taken to address them.
In general, the villages work like this: someone buying into one pays an upfront amount to live in an apartment. They don’t buy the apartment, but an “occupation right agreement” – rather like when you buy a cemetery plot in advance, giving you a “licence” to occupy it (eventually) even though you don’t own the land. When residents move on – one way or another – they or their heirs receive back their initial sum but no interest or capital gain, and minus a deferred management fee covering various costs, such as those for communal amenities, incurred during their tenure. The industry standard for this is 30%, though the percentage can vary widely from company to company.
So, too, can the time the company takes to repay it. In many cases, you get your money only when your apartment is transferred to the next person and the village uses the money from that to pay you out. If you need that money to move somewhere else for family reasons, or to move to a higher level of care for health reasons, you just have to wait. This buyback period is like a long settlement agreement in a property purchase, except in this case only the buyer gets to choose the term and the vendor has no say.