The office of Retirement Commissioner Jane Wrightson has released a report calling for a review of retirement village legislation to reset the balance of power between consumers and village operators.
Te Ara Ahunga Ora Retirement Commission received nearly 3300 submissions on a discussion paper studying the effects of the complex legal framework governing the retirement village sector. While most were from individuals and the Retirement Village Residents’ Association, others came from operators and other stakeholders such as lawyers, supervisors, and consumer advocates (including Eldernet) .
Te Ara Ahunga Ora Retirement Commission’s report concluded that retirement village legislation was at risk of becoming outdated and unfit for purpose, requiring urgent review to eliminate unfair terms in contracts and better protect the rights of consumers. Click here to read the report
Below is a short excerpt taken from Eldernet’s submission. You can read our full submission here.
Do you agree that a full review of the retirement villages framework should be undertaken?
Yes, BUT this is not because the sector does not do a good job at self-regulation (we believe they generally do), NOR because of some bad experiences (we believe these are a minority) but because New Zealand and New Zealanders have changed since the Act and Code were introduced. The current legislation is flawed and possibly too restrictive (for example, the definition of what a retirement village is), and we believe new legislation could do better. New frameworks should look to the future, thinking about what happens to villages after the Baby Boomers have passed through, how can we provide for intergenerational living, how will housing stock be repurposed, improved, rebuilt, maintained? For whose benefits? And at whose cost?
On reading the White Paper we’d also like to comment that:
It is not clear whether the CFFC preferred option for a review will focus on only the retirement village sector (and its associated business model) or about adequate housing for all senior New Zealanders. All business and services should be open to assessment and change (for the better).
Older people should not be treated as ‘vulnerable’ or ‘potentially vulnerable’ consumers. Age does not determine if someone is able to understand and enter into a contract. We must ensure that we all treat older people with dignity and not seek to ‘protect’ them when they are competent adults and free agents.
The Retirement Village model is unique and complicated. This does therefore mean there will be large amounts of ‘paperwork’ to contend with. This does not mean that the sector cannot work to make this less confusing.
We agree with the (high) risk that once a resident purchases into a unit they can easily be priced out of the market both by the Deferred Management Fee (DMF) model and the current rate of increase in property prices. However, residents also have no risk in regard to a property recession or having to account for capital loss.
The Retirement Village sector is not different from many other sectors or businesses in regard to the fact they are covered by/overseen/subject to multiple government agencies and Acts. This alone should not be a reason for transformation of the business model.
Change is (generally) a slow process and whether change comes about by the sector, by Code or Act, change within this sector is not going to be nimble; this is not due to a lack of desire.
Can change accommodate market forces? Who should bear these burdens? Neither the consumer or the operator seem happy to be held to account for greater market forces. Consumers should be protected from risky and poor business practices, but the market should also be free to ‘test the waters’ and to create new offerings. Good businesses also look to minimize risk and exposure.
It was interesting that this document closed with a series of real-life events from residents who had not had good (or legal) experiences with village operators. We consider a more balanced approach would have included some good news stories about the people for whom ‘village life’ has been an overwhelmingly positive experience.
You can read our full submission here