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Ten tips for choosing or living in a retirement village

Presentation for the Law in the Library series Wellington Central Library 3 April 2008

As a representative of the Department of Building and Housing, I cannot give legal advice, or comment on individual situations.

I can however, give you general information about the Retirement Villages Act 2003 and point you to other organisations who may be able to give you more specialised, individual advice.

I’d also like to take the opportunity to identify John Collyns, Executive Director from the Retirement Villages Association, who is happy to take individual queries. The Retirement Villages Association represents about 80% of retirement village operators here in New Zealand.

I’m happy to take questions as I go along – so please interrupt if you don’t understand what I’m saying.

Tip 1: Make a list

Make a list of the thing you want in an ideal village, for example:

  • A community hall
  • Organised activities/trips
  • Swimming pool
  • Library
  • Hairdresser
  • Health services
  • Restaurants

There are different types of villages offering different levels of services and facilities.

  • Some very small villages may only provide housing and access to a community hall.
  • Other villages may have health and leisure facilities on site, restaurants, sports facilities and rest home or in house care.
  • It seems very much a personal choice when people are deciding on moving into a retirement village whether they choose a small village with limited services or facilities or a larger village with more amenities.
  • One of the questions that you may wish to think about is “how long do you think you will live in a retirement village?” Some people think about their needs now and in the future – others think simply about need in the here and now. There is no right or wrong decision in choosing a retirement village, if it is right for you, but if you’re thinking about living in a retirement village for a long time, say more than 5 years, you should think about future needs.
  • Many existing residents are willing to talk to intending residents about their experience and this may help you choose.
  • Do check whether you can take your pets when you move in – do you really want to face a choice between a new home and Fido? 

Tip 2: Go on visits

Visit different villages and find out what they offer:

  • Some villages are run by commercial companies and some are run by religious, welfare and charitable organisations

Under the Act a:

  • small village is defined as no more than 34 residential units
  • medium sized village is defined as at least 35 residential units but no more than 84
  • large village has at least 85 residential units

The size of the village does not reflect the type of operator, but there may be more services and facilities in larger villages than smaller ones

There are religious, welfare and charitable village operators as well as commercial operators. Under the Act, all these types of operators have to register their village so whilst there will be operating differences, you will receive the same level of consumer protection in all registered villages.

You may wish to decide on the size of the village. There is a higher possibility of really knowing all of your neighbours in a village with only 10 properties – alternatively, you may like the idea of a larger village.

Some villages, especially in rural areas are spread over a number of sites, with small clusters of housing, but a central venue for events. If you are looking at this type of village, you may need to consider transport options and whether the operators provides bus services.

It may be worth having a look at a variety of sizes of village before making up your mind. Also remember, if you sign up to a village and change your mind within 15 working days, you are able to cancel the contract without incurring costs. If you have moved into the village, you may have to pay the service fees for the days you live in the village.

Tip 3: Talk to residents

Talk to the existing residents

  • Many retirement villages hold ‘open days’ where you can view the types of accommodation on offer, as well as viewing the property
    • existing residents may be on hand to talk to you
    • ask them what they like about the village
    • don’t be afraid to ask them what they dislike!
    • don’t just ask about practical issues
    • ask about the social issues and life style
    • ask about the emotional issues, such as how long did it take others to settle in

The more questions you ask, the more knowledge you get, giving you a greater chance of making a choice that is right for you.

Tip 4: Think about the future

Think about your future needs

  • What if you need help in the future?
  • What types of help will you need?
    • some villages provide housekeeping services (similar to home help)
    • some villages have a laundry service
  • Some villages have rest homes and hospitals attached to them
    • what are the rules governing entry to them?
    • do village residents get priority?

How long do you see yourself living in the village?

Do you consider yourself ‘invincible’ and not needing ‘additional services and care’? 

Many villages have rest homes and hospitals on the same site as your village. Your contract or village manager will be able to tell you if you are able to move into the rest home or hospital at a later stage. Other villages may offer health and home help services in your residential unit. Some of this information will be contained in the disclosure statement.

Tip 4: Think about the future (a bit more)

mobility issues

  • How accessible are the residential units and community facilities?
  • Are you able to modify your residential unit
    • if you are, who pays? You or the operator?
    • do you have to remove the modifications when you move out of the residential unit? What will this cost, and again, who pays?

The Act does allow residents with mobility and disability needs to modify their residential unit. Check with the village manager and your contract in order to be sure of who pays for these changes – and whether when you move out, you have to return the unit its original fittings (eg removing grab rails in the bathroom).

Tip 5: Read the information

Read all of the information you are given! You must receive a:

  • disclosure statement
  • occupation right agreement
  • the Code of Resident’s Rights

maybe:

  • a Code of Practice
  • a deed of supervision

You can ask for copies of the:

  • last audited accounts
  • financial forecast

There is a lot of information. Many operators and residents have criticised the amount of information provided. The Department will look again at this issue when the Act is reviewed.

But, the information is there for your knowledge and peace of mind. 

At the present time, there is no statutory Code of Practice, but retirement villages that are members of the Retirement Villages Association have a voluntary Code of Practice. John/Philippa – is the Association Code of Practice now in force.

Most retirement villages will have a statutory supervisor to oversee the running of the village. This is a requirement of the Act, and if your chosen village has a supervisor, you will receive a copy of their contract called a deed of supervision.

Some villages are exempt from appointing a statutory supervisor. If this is case, the village should state this and you can ask to see a copy of the exemption certificate.

Tip 6: Costs

Find about the costs:

  • How much is the deposit?
  • How much is the balance?
  • What are the ongoing costs?
    • these should be broken down
  • Are the ongoing costs set for the lifetime of the contract or on an annual basis?
  • How is the annual rise calculated?

There are costs to living in a retirement village. There is often a payment before moving in, sometimes referred to as a joining fee. There are ongoing fees for services and facilities. You should check whether the fees include gas, electricity and telephone bills.

Most villages charge weekly, but bill monthly. Many villages offer a direct debit facility to pay these charges automatically.

Some villages also provide loan facilities. The Manager of the village, statutory supervisor or independent financial adviser may be able to explain this to you.

Tip 6: (More) Costs

  • What are the costs when you leave the village?
  • Is there a capital deduction?
  • What is the percentage rate/amount?
  • Will you have to continue paying fees:
    • What for
    • How long
    • How much
  • Do you pay costs towards the sale of the property?
  • How is the refurbishment cost (if any) calculated?

There maybe costs when you leave the village. Here are examples of the some of the costs at the end. Different villages have ways of calculating fees and not all charge. The end of contract fees are described in the disclosure statement, but it doesn’t hurt to ask.

When you compare costs, remember to compare like with like to ensure that you are maximising your choice and making best use of the information available.

Tip 7: Financial advice

Get financial advice

  • The Act does not require intending residents to take independent financial advice, but you may find it useful
    • check that you can afford the ongoing fees
    • ask how much you may need to ring fence if you leave the village
    • consider whether you want to leave a legacy and whether this is affordable

You are not required to seek financial advice before moving into a village.

However, it doesn’t hurt to sit down with an independent financial adviser who can explain the financial system simply. 

Tip 7: Financial advice

Some residents of retirement villages are eligible for:

  • accommodation supplement through Work and Income New Zealand
    • this is an asset-tested benefit
    • best way to find out if you’re eligible is to phone 0800 559 009
    • make sure you ask about accommodation supplement
  • rates rebate
    • your local authority has information on this

Also, residents in retirement villages may be eligible for Accommodation Supplement from Work and Income New Zealand. As this is an asset-tested benefit, you will need to contact WINZ for further details. There is a toll free number 0800 559 009 and then ask for information on Accommodation Supplement.

Residents in unit title villages may be able to claim rates rebate, and I am aware that some residents on occupation right agreements have been able to claim rate rebates as well. However, this is often down to your local authorities and Department of Internal Affairs.

I am aware that rates rebates is a really big issue within the retired community. This is definitely an area where independent advice is far more useful than my generalisations!

Tip 8: Legal advice

Get independent legal advice. This is a requirement under the Act

  • Your lawyer will sign a certificate to confirm that you have understood the terms and conditions of the contract
  • Types of questions to ask
    • is the village registered?
    • why should I move into a registered village?
    • what is the difference between a unit title village and licence to occupy village?
    • what happens if something goes wrong?

The Act requires that all intending residents seek legal advice before signing a contract with a retirement village. Your lawyer is required to certify that you fully understand the terms and conditions of the contract.

It is worth spending time at the beginning finding out information. There is a complaints and disputes process, but I am assured by residents and operators that avoidance is more pleasant and less stressful!

I would add that the complaints and disputes process under the Act is one of the most regular complaints that I receive! The Department will be reviewing this topic in 2008.

Tip 9: Get it in writing

Get everything in writing

  • Some operators are willing to negotiate on specific clauses in the contract
  • Make sure any changes are recorded in writing and signed by both you and the operator

Simple, but so important. If it is in black and white, then everyone with an interest in your welfare and well-being can see what you agreed to.

Furthermore, if you do vary the contract and it is not changed, this could add costs down the track.

It is in operators interests too, to ensure that both parties fully understand what they have agreed to. Ask and make sure it is written down.

Tip 10: Talk to your friends and family

Talk to your family and friends about your decision

  • Do your children understand the contract you are signing?
    • this is very important if they have Enduring Powers of Attorney, or are given EPA in the future or are the executor of your will
  • Some of your friends who don’t live in a retirement village may be scared of losing contact with you

Your children and friends want you to be happy. If you can’t describe or tell them about your move to a retirement village, they may get concerned and worry unnecessarily about you.

It is really important that those you trust most – especially if you make them the Executor of your Will or give them Enduring Powers of Attorney will need to understand what your contract contains. This is why it is so important to have these issues written down.

If possible, have a friend or relative accompany you when you get legal advice. This way they will hear exactly what you are told and they have the opportunity to ask questions.

Finally, if you move into a retirement village outside of your immediate community, you will be missed! You will be making new friends and enjoying new experiences. Don’t lose your original friends, but make sure they understand why you are moving. There is always the possibility that if you take a two-bedroom property, you could share! If this is not possible, at least they can come and visit.

Complaints

  • All retirement villages must have a complaints policy and process
  • Your operator must provide you with a copy
  • You don’t have to put your complaint in writing
  • Your operator should resolve the complaint in 20 working days
  • If you’re not satisfied, you can go to a dispute

You can make a complaint to your operator about the operation of the village, or another resident.

Your operator can make a complaint about you.

Not all complaints can be dealt with in 20 working days, and your operator could ask for an extension of time. You can choose to accept this or not.

What happens, if you are not happy with the outcome, the way the complaint was handled or a time delay? You can go to dispute.

Disputes

  • A dispute is heard by an independent panel member, approved by the Retirement Commissioner, but appointed by your operator
  • There may be a pre-hearing for the panel member to fully understand the issues
  • Following a hearing, the dispute outcome is made public and available on the Retirement Commissioner’s website www.retirement.org.nzRetirement Commissioner's website.

A dispute is heard by an independent adjudicator. 

The Retirement Commissioner has approved 12 people to hear disputes. 

The operator must inform the Retirement Commissioner if a dispute has been taken. The Retirement Commissioner will issue the operator with the list of approved adjudicators and the operator will appoint an adjudicator from this list.

The adjudicator will take written and spoken submissions. There may be a pre-hearing to fully clarify the issues that are being disputed. These issues are discussed at a hearing.

You have the right to have a support person during both the complaint and dispute processes. If you choose to use a lawyer or solicitor, you must pay the costs.

The Act does not allow operators to pass on the costs of a dispute to residents, and the operators must pay the costs of the dispute including the adjudicators fees.

An adjudicator may award costs in favour of the party that wins the dispute. The party that did not win would pay these costs.

Since 1 October 2006, only four disputes have been taken: in dispute 1, the resident won, in dispute 2 some of the residents complaints were upheld, but not all, disputes 3 and 4 found in favour of the operators. In dispute 4, the residents did have to pay the operator some of the costs.

Problems do exist with the current complaints and disputes process. These problems will be addressed when the Act is reviewed.

Need further information?

If my colleagues can’t help you, you will either be put through to me, or I will receive a message asking me to contact you. Most of the calls can be dealt with on the 0800 83 62 62 number

The Department should be your first point of contact.

My details

Jade Badcock
Senior Advisor – Policy
Department of Building and Housing
PO Box 10 729
Wellington
Phone 0800 83 62 62 (ask for Jade)
Email: jade.badcock@dbh.govt.nz

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