Retirement village repayment period to shrink under new plan

A leaked document shows the Government plans to slash the amount of time people have to wait for their money back when they leave a retirement village.Currently operators must repay residents, or their families, within 12 months of them leaving the village.Some have complained that is too long to wait.The document obtained by RNZ - which looks to be a press release - quotes Associate Housing Minister Tama Potaka saying the Government had listened.The maximum repayment period would be shortened to nine months, and operators will be required to pay 10 percent of a former resident's net termination proceeds within four weeks of leaving the village, it said."Older Kiwis told us the balance needed to shift further towards residents," Potaka said."They told us 12 months was still too long and that interest after six months would not provide meaningful help when money was needed most. We listened and strengthened the package."Tama Potaka.Alyse WrightThe document said the Government also considered a three-month repayment deadline, but official modelling found that could require the sector to hold or access between $3.2 billion and $4.1 billion.That could add up to $118,000 to the cost of entering a village if all costs were passed on to residents, it said.Potaka said nine months strikes a fair and responsible balance."It gets residents their money sooner while protecting the affordability and viability of retirement village living," he said.Operators would still be required to sell units as fast as possible, at the best price possible, the document said.They would also be required to provide regular updates to residents and their families, and obtain a valuation if the unit had not been relicensed after six months."A more efficient and effective dispute resolution system will be introduced for cases where operators are not meeting their obligations," it said.The changes were expected to be made next Parliamentary term.Labour is campaigning on a three-month repayment period.Change will hike residents' costs - retirement village sectorRetirement Villages Association executive director Michelle Palmer said the deadlines would backfire by forcing villages to hold capital for repayments rather than invest in villages, services and care beds."The Government may think this policy will help residents, but it will do the opposite," she said."Residents will pay more, fewer care beds will be built and more older New Zealanders will have to rely on an already stretched hospital system."Palmer agreed residents and families should not face unnecessary delays, and said the sector supported the 12-month repayment window as well as ending weekly fees on exit, clearer disclosure, fairer treatment of chattels, stronger complaints pathways and early access for genuine hardship.She said just as a homeowner is paid when their house settles, a former resident or their estate is repaid once the unit has been refurbished, sold and settled."In a weaker property market, that can take longer," she said."Requiring payment sooner does not remove the cost - it passes it on to other residents through higher fees, higher entry prices or reduced services."