Leaked plan: Govt proposes nine-month retirement village repayment limit

A leaked document reveals the Government’s changes to its planned reform of retirement village repayments for residents, now proposing a maximum repayment period of nine months instead of 12. 

The Herald has obtained a leaked copy of what appears to be a press release in the name of Associate Housing Minister Tama Potaka, who is leading the reform. 

Potaka’s office declined to comment on the leak, referencing an expected announcement later this morning. 

The document stated the Government had agreed to introduce the Retirement Villages Amendment Bill next term to legislate a nine-month repayment period, which was three months shorter than what was initially suggested by Potaka and Seniors Minister Casey Costello in December. 

The legislation would also require retirement village operators to pay 10% of a former resident’s “net termination proceeds”, replacing a provision that would have required interest to be paid after six months if a unit remained unlicensed. 

The changes update what Potaka and Costello proposed following a review of the Retirement Villages Act, which was an item in the National-New Zealand First coalition agreement. 

The two ministers in December said a bill was expected to be introduced mid-2026 but it hasn’t eventuated. 

The Herald has reported on several cases of retirement village residents waiting many months for repayments. One case reported last month concerned a 97-year-old retirement resident who faced having to borrow money because he had to wait 15 months for repayment from his village, which he’d had to leave for a private hospital. 

Last month, Labour announced its own election policy addressing the issue, proposing a three-month maximum repayment period and a 10% upfront payment, capped at $50,000, made within five working days. 

In the leaked press release, Potaka said the Government had “listened carefully to older Kiwis and their whānau” in changing its proposed reform. 

“In December, I said these reforms needed to be practical, balanced and built to last. I stand by that. 

“But listening did not stop when the first decisions were announced. Older Kiwis told us the balance needed to shift further towards residents.” 

Potaka's proposed changes were detailed in a leaked document. Photo / Mark Mitchell 

Potaka estimated the 10% payment would likely be around $60,000 for a resident buying an “average priced retirement village villa in 2028/2029”. It would not apply to villages with fewer than 50 units, while other exceptions were made where residents controlled the sale and price, the resident received at least half of the capital gain or the village was in receivership. 

He argued nine months struck a “fair and responsible balance” between residents getting repaid sooner and “protecting the affordability and viability of retirement village living”. 

In a nod to Labour’s policy, Potaka said he had “looked closely at the three-month option” but claimed it would hike costs for future residents. 

He cited official modelling, which has been publicly questioned by the Opposition and resident advocates, that suggested a three-month repayment period could increase costs of entering a village by about $118,000 “if all costs were passed on to residents” and require the sector to “hold or access between $3.2 billion and $4.1 billion”. 

“I will not make a promise that sounds good but risks higher costs, reduced services or fewer choices for older Kiwis,” Potaka said. 

Other aspects of the Government’s proposed reforms included protections for residents such as stopping weekly fees and fixed deductions after an occupation right agreement ended. A more efficient dispute resolution system would also be introduced. 

Village operators would still be required to take reasonable steps to enter into a new agreement for a former resident’s unit in a timely manner and at the “best price reasonably obtainable”. They would also be required to provide regular updates and obtain a valuation if a unit hadn’t been relicensed after six months. 

Potaka said the new repayment requirements would apply to agreements signed one year after the legislation was passed, meaning it was unlikely the changes would come into force until well into the second half of next term, presuming a full six-month select committee process was undertaken. 

Adam Pearse is the Deputy Political Editor and part of the NZ Herald’s Press Gallery team based at Parliament in Wellington. He has worked for NZME since 2018, reporting for the Northern Advocate in Whangārei and the Herald in Auckland.