Dire need for retirement sector reform
OPINION: There’s nothing like the cold, merciless eye of public scrutiny to get a sector facing up to the need for change.
This is happening in the retirement village sector, and the items on the sector’s ‘‘to do’’ list are a must-read for anyone who is considering moving into a village.
It’s also a must-read for their adult children, who very often help their ageing parents in their decision-making.
Consumer NZ, Te Ara Ahunga Ora The Retirement Commission, and an increasingly loud Retirement Village Residents’ Association have made repeated, and effective calls for tougher consumer protection laws.
Parliament is listening. MPs are sympathetic. There seems to be cross-party support for a review of retirement village law, though heaven only knows when it will happen.
However, all the criticism has shaken villages owners out of what can uncharitably be called their self-congratulatory ‘‘nothing to see here’’ attitude.
Most village residents are happy in safe, pleasant surroundings with like-minded souls, freed from the need to maintain private homes, and in some cases, even owning cars. Some villages have shared cars residents can use.
At any time around 50,000 people have paid for ‘‘occupational right agreements’’ (ORAs) to live in a village, even though when they leave (or die), they (or their estate) get back only part of their capital, minus a large deferred management fee.
It’s a time-honoured tradition for industries to claim the status quo is fine, until the writing is on the wall.
Well, the writing is on the wall, and the Retirement Village Association (RVA), the lobbying industry body for village owners, has created a ‘‘blueprint’’ to lift industry standards. This is to the industry’s credit.
The blueprint shows many of the consumer protection issues are loaded at the end of people’s stay in villages, when they die, or transition into rest home care.
UNFAIR CONTRACTS
In a remarkable admission of consumer abuse, the RVA has admitted some clauses in some ORAs are ‘‘unfair’’, and has been working to get villages to remove them.
These include clauses purporting to make departing residents liable for any capital losses they suffer when selling new ORAs on vacated units, despite departing resident getting no share in any increases in ORA prices.
LONG WAITS FOR RETURN OF CAPITAL
Departing residents have to wait for a village to sell a new ORA on their unit, before they get their money back. This can take weeks, or months, sometimes more than a year. The RVA’s blueprint has larger villages (villages under 50 units are exempted) pledging to pay ‘‘meaningful’’ interest on people’s money, if they fail to repay it within nine months.
WEEKLY FEES
RVA member villages (except the little ones) have agreed not to carry on charging people who have left the village (or their estates) weekly fees.
TRANSFERS TO CARE
Village owners will help people transfer to care, even if it means them lending residents money to do so. The delayed release of ORA money can be a barrier to a sick person being able to move.
REPAIRS AND MAINTENANCE
No longer will RVA members be able to bill residents to repair, or replace ‘‘operator-owned’’ chattels like water cylinders. Residents saw this as symbolic of a massive power imbalance.
HEALTHY HOMES STANDARDS
Remarkably, though private rentals have to meet national healthy homes standards, retirement villages, like private owner-occupied homes, don’t. The RVA is requiring members to meet healthy homes standards.
It’s fair to say the residents’ association doesn’t think the reforms of the RVA go far enough. But it shows why it’s important for consumers to band together to make a stink.