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Considering a Retirement Village? What You Need To Know Before Moving Into A Retirement Village

A Retirement Village is lifestyle accommodation for retired or elderly people. This is distinct from a “Rest Home” or “Nursing Home” which has nurses and doctors on hand. Some larger establishments offer both options, but others specialise in one or the other.

There are about 30 Retirement Villages In Tauranga, so there are plenty of options.

Why are you looking into Retirement Villages? Is one of the following statements true for you?

  1. You are elderly and you’ve been encouraged by your children to simplify your life and avoid maintenance concerns and security concerns
  2. You’ve come to the realisation that you're not capable of managing your affairs anymore
  3. You’d like to free up capital that is in your house (the value of your house will have to be more than the cost of the unit of course)
  4. Or, you are a concerned family member looking into the matter for an elder

The 8 main benefits of moving into a Retirement Village

  1. The security of a gated community
  2. Someone else manages repairs and maintenance issues
  3. Your neighbours are just like you (eg you’re unlikely to have to call noise control to get loud music turned down)
  4. Help is moments away if you have an emergency
  5. Fixed costs are easier to budget for
  6. If you go on holiday, it’s easy to arrange your mail, pot plant care etc
  7. Your children feel more comfortable that you’re now in a safe environment
  8. You can free up capital from selling your home for recreation and travel

What The Law Says About Retirement Villages

From a legal point of view, Retirement Village life is complicated.

This is because the NZ government has taken extra steps to protect vulnerable elderly people.

There are 3 primary documents that a lawyer can help you understand:

  1. The Occupation Right Agreement
  2. The Disclosure Statement
  3. The Code of Practice

Every retirement village has their own version of these documents (which must comply with the Retirement Villages Code of Practice 2008).

We will go through these documents with you (it takes a couple of hours) to ensure that you understand them. We will certify that this is the case by personally signing the documents.

You’ll need to understand the various parties involved such as:

What else do you need to know?

Here’s a list of questions we get asked most often.

Questions About Retirement Village You May Be Wondering Right Now

Q: “What do I ‘own’ when I purchase a Retirement village unit?”

You do not own the unit, or the land. You own a licence to occupy the unit and enjoy the common areas. You have purchased the right to live there for your life time. There are conditions on these licences and rights. Namely, if you misbehave, you can be evicted. So the days of wearing nothing but your underpants whilst you garden are behind you.

Q: “Can I get a mortgage?”

No. There are no mortgages. You'll need to pay the full amount before moving in.

Q: “If I purchase the unit for $200,000 today, what is it worth in 10 years time?”

The same amount. The value of the unit is frozen on the day you purchased it. A 20% - 30% fee will be deducted from this amount, and the amount left over will be paid into your estate. This fee is sometimes called an "amenities fee", or "facilities fee", or "village contribution".

Q: “What is the weekly cost of staying in a retirement village?”

Typically the weekly fee ranges from $100 - $150.  You can expect this fee to cover rates, insurances, power. Most likely you will have to pay separately for your own telephone and things such as maintenance of the interior (eg vacuuming). Some retirement villages provide meals, a hairdresser, a workshop with powertools, gym, bowling green, swimming pool etc.

Q: “When I die, does my family get the value of the unit straight away?”

No. The unit needs to be sold to another person first before your capital is freed up. A 20% - 30% fee will be deducted also.

Q: “Does my family have to pay to restore the unit to as-new condition?”

They will not be invoiced for deterioration to the interior that has occurred during normal wear and tear. For example, your carpet wearing thin (this is a new rule since 2008). But anything such as spilt wine on the carpet or smoking damage will result in a charge. For contracts made prior to 2008 the managers of the complex can refit the unit to brand-new condition with a new kitchen, bathroom etc, and send your family the invoice.

Q: “Can I leave before I die?”

Yes, but it's an expensive way to go. Once the unit is sold to someone new, you will be reimbursed the amount you invested less the fees (20-30%).

What’s Next?

Once you’ve found a Retirement Village that you like, gather the paperwork and ensure you read it thoroughly and understand it.

If you need help understanding it, give us a call and join over 500 clients that we have helped with their Retirement Village contracts: