Double-whammy proposal will jeopardise smaller operators and have chilling effect on future retirement village and care bed development
4 December 2025
The Government’s proposed changes to the Retirement Villages Act are flawed and will heap significant financial pressure onto small-to-medium-sized operators, while putting the brakes on new villages and care beds, says the Retirement Villages Association (RVA).
The proposals include interest being paid after six months if a unit remains unlicensed, repayment of funds no later than 12 months after a unit is vacated, a process for former residents to apply for early access to funds in situations of specific need, weekly fees and deductions stopping immediately when a resident vacates and an new independent disputes scheme.
“Introducing both interest after six months and a 12-month mandatory buy-back period for village operators will create a double financial hit and have a chilling effect on the development of retirement villages and care beds,” says RVA executive director Michelle Palmer.
“These proposals won’t just burden operators - they risk derailing the Government’s ambition to build more homes and care beds for older New Zealanders. They will slow development when we urgently need to accelerate it.
“For villages with more than 50 units, especially not-for-profit operators, requiring interest at six months effectively brings the buy-back burden forward - with costs starting to mount at six months and then crystallising at 12 months, compounding the financial pressure.
“We support operators paying interest if repayments take too long, rather than a fixed mandatory repayment period.
“As it currently stands, the mandatory repayment period will, for some operators, push up costs for residents, slow down new development and the delivery of new care beds, and may force the closure of smaller regional and charitable villages.
“That’s because the way the retirement village model works means funds are committed to debt repayment, infrastructure and services, not sitting idle.
“Operators only receive a Deferred Management Fee (DMF) when a new resident moves in, at which point outgoing residents or estates are re-paid.
“Forcing operators to repay residents or their estates before new funds come in will make the model more expensive and less sustainable, with many operators required to seek new lines of credit or funding from their banks.”
Relicensing homes to new residents requires refurbishment, marketing and settlement, says Palmer.
“Operators are already strongly incentivised to resell independent living units quickly because they only generate payment once a new resident moves in. Adding interest after six months would create even more incentive, but if the operator also has to pay out six months later, it’s a double whammy.”
Most operators already stop charging fees and pay interest if repayments take too long, and the RVA believes this approach should be standard across the sector instead of the mandatory repayment period.
“In parts of Australia, mandatory buy-back rules have forced operators to pay out regardless of resale,” says Palmer.
“The result has been higher resident fees, a slowdown in development, villages without care and reduced choice for older people - outcomes no one wants to see here.”
The sector welcomes other aspects of the reforms, including stopping weekly fees when a resident exits, clarity around chattels and a simplified complaints scheme.
Palmer says the fact around 130 New Zealanders choose to move into a village every week shows strong confidence in the model.
“Residents enter contracts with the benefit of mandatory, independent legal advice. We support a review of the Act, and any reform should protect what works and improve what doesn’t in an evidence-based, practical and balanced way.
A recent report by Jones Lang LaSalle found that based on the current development pipeline, there would be a shortage of 11,284 retirement village units by 2033, escalating to 23,241 units by 2048.
“We want to work with the Government to get a balanced outcome to ensure we have a sustainable industry that works for both operators and residents,” says Palmer.
ENDS
For more information, please contact:
Sam Halstead
027 474 6065
[email protected]