New Zealand: Moving to a retirement village – are you ready for the move?

Last Updated: 29 November 2017
Article by Chantal Morkel


Like many other countries, New Zealand has an ageing population. This is giving rise to an increasing number of people moving into retirement villages.

Buying a unit in a retirement village is different to buying your own home, and there are a number of factors to consider when making a decision to move to a retirement village.


Think about what you need to live a great life. The small things in life matter.

Due to an increasing number of retirement village developments, there is a wide variety of retirement villages to choose from. Whether you are interested in a larger resort-style retirement village, or a smaller boutique-style retirement village, there is likely to be a retirement village that is right for you.

Choosing the right retirement village is important, and we recommend that you pinpoint the things you really want when moving into a retirement village, including:

  • Location of the retirement village
  • Fees payable on entry, during your stay and when you leave
  • Support and healthcare options
  • Facilities of the retirement village
  • Size of the village
  • Social activities arranged at the retirement village
  • Garden and other maintenance obligations

These matters are usually addressed in the Disclosure Statement of a retirement village. You can ask a village manager for a copy of the Disclosure Statement at any time.

The legal stuff

There are a number of legal structures used in retirement villages. The majority of retirement villages offer an occupation rights agreement. The occupation right agreement gives you the right to live in your unit for your life, but with no ownership rights in the unit or village land and buildings. This means you can't offer the value of your unit as security for any debts that you may already have, or intend to incur.

When choosing a retirement village, remember to ask your lawyer to check the ownership structure of the retirement village, and how your right to live in your unit will be recorded.

The costs involved

There are costs payable when you enter a retirement village, during your stay at a retirement village and when you leave a retirement village.

Upon application to secure a unit, you may be asked to pay a deposit to secure your unit. The balance of the purchase price is usually paid when you move in.

During your stay at the retirement village, a percentage of your purchase price will accrue to the retirement village owner, typically up to a maximum of 30% of the purchase over a number of years. This accrued fee is often described as a "Deferred Management Fee" or "Licence Fee", and while this fee accrues to the retirement village owner during your stay, it becomes payable when you leave the village and it will be deducted from the purchase price paid by you when you entered the retirement village. On this basis, entry into a retirement village may not be seen as an investment.

In addition to the accrual of the Deferred Management Fee, you will also be responsible for payment of other fees during your stay at the retirement village. Examples of the ongoing fees are weekly village fees (to cover insurance, maintenance costs) and care services fees.

When choosing a retirement village, you should ask the retirement village manager to clarify fees applicable to you including:

  • Purchase price
  • Deposit
  • The amount of the Deferred Management Fee and how it is calculated
  • Ongoing fees that will apply to you
  • Whether the ongoing fees fixed or can they be varied
  • When the ongoing fees are payable
  • Fees payable if you transfer between units
  • When payment of the ongoing fees cease
  • When you will receive your exit payment

The fee structures of a retirement village is usually addressed in the Disclosure Statement of a retirement village.

The process when you enter the retirement village

If you are interested in a retirement village, the first step is to arrange a time with the manager of the retirement village to show you around and talk through your options. If you like what you see, you can ask the village manager to provide you with a copy of the Disclosure Statement of the retirement village. The village manager may ask you to sign an application form to secure your unit, and at this point, we strongly advise that you seek independent legal advice prior to signing the application form.

Once you have signed an application form, the village (or their lawyer) will arrange to prepare the occupation right agreement and send it to your independent lawyer for review. Your application may be subject to certain conditions (such as the sale of your family home or provisions of medical information to the village) and your lawyer will work through the conditions of the application with you, including meeting with you to sign the occupation right agreement.

The process when you leave the retirement village

You can terminate your occupation right agreement at any time without giving any reason for the termination. The village owner can also terminate your occupation right agreement if due to your health you cannot safely live in your unit, if you have abandoned the unit, if you have breached the terms of your occupation right agreement or if you are likely to cause harm or damage to your unit or another person at the village.

Following termination of your occupation right agreement, you must vacate your unit and remove your possessions.

The village owner usually controls the sale of your unit. Most retirement villages will pay your purchase price less the accrued Deferred Management Fee and other fees owing to the village owner to you once your unit has been sold to a new resident.

Summary and top tips

Moving into a retirement village is a big step. Do your research and take your time when choosing a retirement village suitable for you.

Remember to:

  • Talk to a lawyer who is experienced in retirement village law
  • Involve your family and friends
  • Talk to other residents of the retirement village and ask them about their experience living in the retirement village
  • Do your research and visit other retirement villages to compare the offerings of retirement villages
  • Make a list of the things that are important to you, such as fees payable, health services, transition to care facility, amenities, activities, security, companionship and maintenance responsibilities
  • Get your calculator out – can you pay the purchase price and can you manage to pay the ongoing fees

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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