Retirement Villages Association president Graham Wilkinson responds to the opinion piece by the Retirement Villages Residents’ Association’s Dick Williams which claims retirement legislation favours the operators rather than the residents.

The article by the RVRA raises several issues, some of which the majority of village operators would agree with. In particular the decision by Metlifecare to discontinue to charge village fees on the termination of units is welcomed and their innovative $20,000 interim pay-out, presumably to assist with estate expenses, is another step in the evolution of the retirement village product. Market forces are causing larger operators to rethink and improve their offering to make it as trouble free and attractive as they can.

However the suggestion around “repayment of the capital repayment when the ORA is terminated” is simply impossible to consider. It would stop the industry overnight as banks would refuse to fund villages regardless of their size. Further, it would create significant difficulties in some religious and welfare organisations particularly in small towns. These operators sometimes even need to keep charging fees after termination simply because of their modest financial status and small market.

If you think this is just self-serving industry talk, then one needs to only look at the 1980’s when one of New Zealand’s retirement village pioneers, United Lifecare, offered that exact provision – within 3 months of termination the capital payment was required to be repaid. As a result, after a period of higher than usual terminations and a stagnant real estate market, the company became insolvent despite being owned by a major Australian bank. The villages were eventually sold – there is some irony in the RVRA article –this led to the creation of Metlifecare – without the onerous repayment clauses.

As to the length of time involved in repayment, this can be affected by many factors, as it can be when a son or daughter sell their parents’ home after they have passed away. For the last few years, it has often been possible to sell and settle a house within 2 or 3 months; and village re-licencing has followed a similar timeframe. No doubt it will slow in the future if the economists are accurate in forecasting market trends.

While having a full capital pay-out on termination is unlikely to ever be adopted by any operator, many are being inventive in how they compensate the estate for what they view as excessive delay. Most of the large corporates now provide interest on the sum due after a certain period, usually 6 months, and some operators even rebate back the deferred management fee after this time.

None of this is required by statute, but the vast majority of the industry sees residents and operators as a partnership and have no interest in onerous or one-sided arrangements. Customers of any product only exist if their needs are met and based on the numerous independent satisfaction and NPS surveys, residents are in the main, extremely happy and serious complaints are rare. If exploitation was real, these results would not occur [and villages would be empty].

One of the reasons for this satisfaction is the tight regulation that operators must comply with. Overseas, where such stringent disclosure and supervision does not take place, negative media and horror stories are commonplace. We are all, resident and operator alike, fortunate that the legislation was well considered on creation and is reviewed regularly.

Of course, just as in the community, there will sometimes be a difference of opinion between various parties and where appropriate the regulations provide for mediation and hearing disputes when agreement cannot be reached. All this is sensible and appropriate and produces a high degree of self-regulation but also redress to a higher authority does exist if an issue is unable to be resolved.

Villages in New Zealand are growing every day, in size, type, location and product offering and the public is becoming more aware of the benefits of village life.   There is little need to interfere with this situation or try to rewrite the industry.

To read Metlifecare chief executive Glen Sowry’s additional response, please see here.




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