Many legal minds making NZ LAW work

We are an association of independent legal practices, proactively sharing ideas and expertise for the benefit of our clients.

Retirement village life

Published: 30th November 2018

Author: Andree Talbot, Simpson Western

Published in: Fineprint, Summer 2018, No 77

Retirement village life


The upside (and downside) of downsizing

New Zealand’s ageing population has created a boom for retirement villages, with record numbers being developed. For many looking to retire or slow down, retirement village living is attractive – and it’s not hard to see why. A new apartment or cottage in a secure, well-maintained environment, offering a lock-up-and-leave lifestyle, and providing resort-like facilities such as cafes, gyms, pools, bowling greens, libraries and men’s sheds can be very appealing.
Many clients tell us how happy they are to have made the move, some even say they wish they had done it sooner, but retirement village living is not for everyone. It’s important to think carefully about what this move means for you – both financially, and in terms of your current and future needs.

Consider carefully

Do your homework and consider your options. Why do you want to live in a retirement village? Will this move meet your needs in the future? What happens if your health or financial circumstances change? Have you considered the alternatives? Do your family and friends support a move?
We recommend you visit as many villages as you can, including those close to where you live now (you may want to keep up connections to clubs and your social circles), and talk with family and friends about their villages and about your intentions. You’ll want their support to make sure the move is right for you.
You should also look at other options such as staying in your current home (or downsizing to a smaller one) and bringing in help for gardening and maintenance, having home carers visit, using driving services and so on. If you are ‘house rich but cash poor’, you could consider taking out a reverse mortgage although this should be investigated fully beforehand.

Retirement village essentials

A ‘licence to occupy’ is the most common structure used for retirement villages. This licence gives you the right to live in a unit for your lifetime. If a couple owns a licence it continues until the survivor has died. It is usually called an Occupation Rights Agreement (ORA).
As residents, you won’t actually own the unit and are unable to sell or lease it (including renting it out as an Airbnb property). When you purchase a license to occupy you will sign an application and pay a deposit. You must be provided with a package of the documents (including the ORA and a disclosure statement) setting out your rights and obligations. It explains the financial implications of the purchase, provides details of development plans, village rules, policies, shared facilities and much more.
You should read all this material, and then bring it in to us. The legislation requires us to complete a formal certificate to confirm that we have explained the nature and effect of these documents to you and that you understand them before you sign.
It’s worthwhile remembering that you do not own any part of the village land or the buildings so you don’t usually benefit from any capital gain or carry any capital loss (although some ORA documents do have different provisions).

The cost of retirement

It is standard practice for the village to deduct a ‘deferred management fee’ which covers the cost of operating and maintaining the village. It usually ranges from 20%–30% of the ORA purchase price. It is accumulated over the first two to five years that you occupy your unit, but will not be deducted until your unit has been sold to a new resident. At that time the village will pay you a repayment sum, less any fees you owe to the village, any costs of repair or reinstatement and the deferred maintenance fee. This means that when you leave the retirement village, you will receive a sum significantly less than the price you paid for the right to occupy your unit.
Residents collectively contribute to the village outgoings (such as insurance and rates) through a regular outgoings fee. This fee is usually fixed for the duration of the ORA. However, increases may be linked to annual CPI increases or New Zealand Superannuation, or may be increased on notice from the village.
You will also pay for telephone, power, internet or SKY tv. You will need to consider whether you will be in a position to pay any increasing utilities costs. It may be fine when there are two of you, but may be harder if one of you dies. If you are unable to pay your fees, some villages will let the fees accumulate in their books until you sell – meaning there will be less cash on terminating the ORA, but you can continue living in your unit.
However, there is now some relief in relation to the costs of living in a village. Recent law changes mean that a resident who meets the financial eligibility criteria can request a partial refund of their contribution to their village’s rates payment. It’s a similar situation as if you owned your home.

What happens when I move out?

On termination, the deferred management fee and any other outgoings you owe the village will be deducted from your repayment sum. Your monthly or weekly fees are likely to continue until a new resident is found.
Some ORA documents allow the village to charge a percentage of your original purchase price as an ‘administration fee’ when you terminate. You may also be charged for the village’s legal fees for arranging the end of your ORA.
If you move from one unit to another in the same village (or to a new unit in a village owned by the same operator) your ORA may allow the village to charge you a transfer fee.
If your unit is modified to meet your needs, you will usually pay the extra costs. On termination, the alterations may need to be removed, also at your cost.
When you vacate your unit it will be inspected to assess what work needs to be done before it can be offered to a new resident. Although you are not liable for fair wear and tear, you are liable for repairs.
When you terminate, most ORAs record that you cannot receive the repayment sum until an incoming resident pays for the new ORA. This means you or your family may wait months for the cash. Some villages, however, now offer an advance part-repayment so that you can pay a deposit on a new home or to assist your family with costs if you have died.

Lifestyle village or full-care village?

Is a lifestyle village or a full-care village right for you? The former offers independence but within a secure community – sometimes with access to shared recreational facilities. The latter offers independent living units as well as a rest home and private hospital facilities.
If you are in a lifestyle village and your or your partner’s health fails, you may need to move to another village offering more care or to a rest home. It may be that if one partner is moved to a rest home, the other must remain in the unit until it is sold, which will make life more difficult and costly.
Moving from one village to another can be expensive – the deferred management fee is deducted for your unit on termination, so you will have less to spend on a new unit. In addition, a new ORA will start the clock again on another deferred management fee. However, if you move between villages owned by the same operator you can often arrange for a credit of the deferred management fee from your old unit to the new one (so you only pay this once).
Retirement villages are here to stay and are increasingly popular. They can be a great option for many people. However, our advice is to look around and do your homework, make sure your family is aware of your choice and speak to us for advice. We are always happy to help.

Related Articles

  • Auckland
  • Bay of Plenty
  • Canterbury
  • Coromandel
  • Gisborne
  • Hawke's Bay
  • Kapiti Coast
  • Manawatu - Wanganui
  • Marlborough
  • Nelson
  • Northland
  • Otago
  • Southland
  • Taranaki
  • Waikato
  • Wairarapa
  • Wellington
  • West Coast

Daniel Overton & Goulding

We offer a wide range of legal services and advice to our clients who come to us with a number of different legal issues. In all instances we strive to get our clients the best advice and outcome. Come to our experienced and knowledgeable team about any legal issue and if we cannot find the answer we will be able to get you the right expert who will get you the right advice, and get you the best result. This is a vital part of our client care.

Region: Auckland

Phone: 09 6222 222

Sandford & Partners Lawyers

We are a medium sized Rotorua law firm practicing in areas of business and property law, public law and personal legal services.

We are professionals who listen, who seek to understand your needs, and give practical and usable advice. We thrive on the challenge of providing excellent legal work and aim to give you the highest level of service. For us, working for you means dealing with the little details as well as the big picture.

Region: Bay of Plenty

Phone: 07 348 6039

Argyle Welsh Finnigan

Argyle Welsh Finnigan is a leading law firm in Ashburton,  the town servicing mid Canterbury, New Zealand.

The firm employs a team of over 25 legal professionals, including three Senior Associate Solicitors, three Staff Solicitors and five Legal Executives.  Our firm provides quality legal services with a commitment to our clients and to understanding their individual needs and requirements. 

With more than one hundred years of combined legal experience, we are able to offer prompt and professional advice on a wide range of legal matters.

Region: Canterbury

Phone: 03 308 8228

Purnell Lawyers

There is nothing as inevitable as change. Since opening for business early last century, we at Purnell Lawyers have seen many changes both in name and in the people who have made up the members of our team. We have been privileged to have served the public throughout all of these times. 

We are confident that we will continue to bring top quality legal services to our clients well into the future.

Region: Coromandel

Phone: 07 868 8680

Woodward Chrisp

At Woodward Chrisp we strive to meet the needs of our clients by providing a wide range of high quality legal services within a supportive and collaborative environment.

Woodward Chrisp is the amalgamation of two long established Gisborne legal firms: Woodward Iles & Co and Chrisp and Chrisp. Today’s partners are Ross Revington, Adam Simperingham and Jeff Allen.

Region: Gisborne

Phone: 06 869 0900

Gifford Devine

For all life’s matters, the team at Gifford Devine have your back. Since 1896, our lawyers have been providing straight-talking, practical advice and advocacy to people, families and businesses in Hawke’s Bay.

As your legal champions, we’ll serve you as a trusted adviser, listen to your needs, offer plain English advice, and find a solution to get you the best possible outcome.

We have the expertise to identify potential legal issues, to help you make important decisions, and to realise your goals. We’re your legal champions for all reasons and at all stages of life.

Region: Hawke's Bay

Phone: 06 873 0420

Breaden McCardle Lawyers

Breaden McCardle Lawyers is the largest full service legal practice in the Kapiti Region.

We are here to help you and pride ourselves on providing practical, solutions based advice to clients in an approachable and straightforward manner.

Region: Kapiti Coast

Phone: 04 296 1105

CS Law

Looking after you, your family, and the small print.

Region: Manawatu - Wanganui

Phone: 06 368 9239

Wain & Naysmith

Based in Blenheim, Wain & Naysmith Lawyers is a full service law firm, and a powerhouse for property, family and business law.

We pride ourselves in providing clear and cost effective legal solutions and practical advice for you, your family and your business.

Region: Marlborough

Phone: 03 520 6103

Knapps Lawyers

As a firm, we promise to look after you and treat you in a manner that we would expect to be treated by a professional services provider; we promise to use every available legal remedy available to us to resolve your issue and to do what you ask us to do in a timely manner.

We will hold in strict confidence all information that we acquire through our work for you and which concerns your business or personal information.  The only exceptions are where you authorise us to disclose such information or where we must do so by law.

Region: Nelson

Phone: 03 544 7888

Law North Limited

We pride ourselves on being a "general store" for most legal issues but also have several in-house experts in specialised areas including trusts, relationship property, business and property law.  No matter what your issue is - whether you are looking for trusted legal advisers to steer you through life, or you have a one-off problem to sort out - we would be pleased to help.

Law North Ltd provides a broad range of legal services across the Far North district from our base in Kerikeri.   We have operated in the area for over 100 years and have a long-standing history of providing legal services to a diverse client base, including businesses and private clients.   Our directors and their families have been part of the Bay of Islands community for several generations and remain committed to the area and its people.  We often call upon strong local knowledge to resolve issues for clients whilst remaining vigilant about client confidentiality.

Region: Northland

Phone: 09 407 7099

Aspiring Law

As one of the leading general practice law firms in Wanaka, the wider Upper Clutha and Central Otago Lakes district, our job is to explain both of our respective roles in managing your legal matters.

We’re a friendly group of people and our philosophy is based on three simple principles to make sure you avoid messy, lengthy, and costly legal issues:

  • Don’t leave anything to chance - certainty provides peace of mind
  • Seek expert advice - it really is the best and most cost-effective thing you can do
  • Ask for that advice early - it will be cheaper for you in the long term

Region: Otago

Phone: 03 443 0900

Sheddan Pritchard Law Ltd

Incorporating traditional values and a fresh perspective, Sheddan Pritchard Law is here to assist you with all your legal needs. 

Our friendly and team-driven approach underpins our firm’s values, recognising the importance of putting people first and allows us to connect and nurture professional relationships with new and existing clients within our local community of Gore, as well as throughout New Zealand and extending overseas.

Region: Southland

Phone: 03 209 0030

Welsh McCarthy

Welsh McCarthy practises in Hawera, South Taranaki. Predominant industries in the South Taranaki district are dairy farming, oil and gas. The South Taranaki area also has the largest one-site multi product milk processing facility in the world

We deal with company and commercial transactions, commercial and family law, farm and residential sales and purchases, estate planning and family and charitable trusts. A large part of the firm also deals in the area of family law.

Region: Taranaki

Phone: 06 278 5039

Allen Needham & Co Ltd

Sir Stephen Allen, founder of the firm, was admitted to the bar on the 7th of December 1906 and subsequently set up practice in the building illustrated below on the present site of our offices at 52 Canada Street, Morrinsville on the 1st of January 1907.

Mr Arthur Needham was admitted to the bar on the 1st of March 1923 and Mr R. B. Morton on the 24th of November 1924. They joined Sir Stephen in partnership under the name of Allen, Needham & Morton.

The firm was subsequently called Allen, Needham, Sanford & Lang when the partners of the firm were John Needham (son of Arthur Needham, and father of Rod Needham, a present partner), Howard Sanford, Fred Lang and Graeme Ashmore.

Graeme Ashmore left the firm in 1972 and Howard Sanford retired as a partner in 1974 when Greg McDonnell became a partner with John Needham and Fred Lang.

The firm changed its name to Allen, Needham & Co. in 1986 when new partners Rod Needham and Bob Craven joined the firm. In December 2010 the firm became an incorporated company.

Region: Waikato

Phone: 07 889 5062

Gawith Burridge

Gawith Burridge traces its history back to 1875 when Charles Gawith first set up his practice. Since then the firm has undergone many changes, including a merger between Gawith & Co and Burridge & Co in 1998 to form our current practice.

Our firm draws on the breadth of expertise available from some of the region’s most senior legal practitioners, as well as the skills of those who have moved here from larger corporate environments.

As a result, we provide clients with a comprehensive range of legal services right here in the Wairarapa. We can provide you with legal assistance whether you are an individual or a company, with everything from setting up a Will to selling your farming business. 

Region: Wairarapa

Phone: 06 370 0000

Gillespie Young Watson

We specialise in Property, Commercial and Trust Law. When it comes to law firm size we are bigger than smaller and smaller than big. By limiting the work we do to our specialist areas, we like to think we bring together the best of big firm skill sets with the personal care, attention and relationships of small firms.

We expect our clients to receive clear, practical and timely advice. We place a premium on accessibility and convenience to our clients. We value and appreciate all of our clients and want to do the best possible job for each of them. When we close a file we want the client to feel they have received exceptional advice, service and value.

Region: Wellington

Phone: 04 569 3997

Hannan & Seddon

The Law Firm of Hannan & Seddon dates back to September 1867.

The firm's offices were in Werita Street from 1867 until 1982 when the firm moved to Tarapuhi Street and then to its current spacious premises at 61 Guinness Street in 1998.

The name Hannan comes from Mr Michael Hannan whose son John Hannan (Jack) joined the firm in 1908. Jack Hannan remained in partnership until he passed away in 1974 at the age of 90!

The name Seddon comes from Mr T E Y Seddon (son of Premier Richard John Seddon from Kumara) who joined the firm in the 1920's. The other prominent Solicitor at Hannan & Seddon was Cyril McGinley who joined the firm in the late 1920’s and retired as a Consultant in 1997 aged 87.

Currently we have two Partners within our firm. Tony Sullivan who has been with us for 29 years and Colin Smith, 26 years. The firm also has two long serving Legal Executives Elaine Knowles and Beverley Walsh.  

Region: West Coast

Phone: 03 768 4169

All the information published on this website, or in any article herein is true and accurate to the best of the authors' knowledge. Information on this site should not be a substitute for legal advice. No liability is assumed by NZ LAW Limited, or individual NZ LAW member firms for losses suffered by any person or organisation relying directly or indirectly on information published on this site. Views expressed in any article are the views of the authors individually and do not necessarily reflect the view of NZ LAW or their member firms. Information appearing on this site may only be reproduced with prior approval from NZ LAW Limited Head Office, and credit being given to the source. © NZ LAW Limited