Retirement village complaint off to Commerce Commission
Retirement village residents have complained to the Commerce Commission about what they claim are unfair clauses in retirement village occupation right agreements.
The Retirement Village Residents Association has been lobbying MPs to overhaul the laws governing retirement villages through a petition to Parliament.
They are supported by Te Ara Ahunga Ora The Retirement Commission, and by Consumer NZ, both of which say a review of the law is long overdue, with Consumer NZ calling out the existence of ‘‘unfair’’ contract terms in occupation rights agreements (ORAs).
But they have now opened up a new line of attack through the complaint to the Commerce Commission, which has the power to investigate whether contracts contain unfair clauses.
‘‘Right now, retirees across the country are getting a raw deal,’’ said association president Brian Peat.
ORAs are the contracts that retirees have to agree to in order to be able to live in a retirement village.
They pay large capital sums for ORAs and get their capital back, minus a large ‘‘deferred management’’ fee when they leave.
Among the ‘‘unfair’’ ORA clauses they want tested, and ultimately banned through law changes, are those that permit some villages to hold on to ex-residents’ capital until they have sold a new ORA on the unit the ex-resident vacated.
Other clauses the association says are unfair include those requiring former residents to keep paying weekly management fees for months after they vacate a unit.
‘‘Discussions around unfair clauses in retirement village contracts have been well traversed. There is no shortage of information on which to act,’’ Peat said.
‘‘Consumer New Zealand has been hot on this topic for a number of years. On February 2, 2021, it released impartial advice detailing the financial sting being suffered by retirees across the country.
‘‘The Retirement Commission’s white paper in 2020 also detailed ongoing and significant issues.
The political lobby group for retirement village owners, the Retirement Villages Association (RVA), has created a ‘‘blueprint’’ plan for enhanced self-regulation, and has told Parliament that some of the Retirement Village Residents Association’s demands for law change could drive some smaller, rural retirement villages to the wall.
The residents association has called for a limit on the time a village operator can hold on to a former resident’s capital, calling for it to be as short as 28 days.
Amid the self-regulation proposed in the RVA blueprint is a requirement for village operators, which are members of the RVA, to pay interest on outstanding capital sums, if a former resident has not been repaid within nine months of leaving a unit.
But its self-regulation plan includes ‘‘addressing any unfair clauses in ORAs’’. It says the RVA will also review the ORAs of its member villages to identify ‘‘clauses that are unfair and engage with members to ensure that any unfair terms are removed’’.
But Peat said retirement village operators ‘‘have had years’’ to selfregulate. ‘We want to see the use of these unfair clauses by operators removed from existing and future agreements.’’
‘‘Right now, retirees across the country are getting a raw deal.’’
Brian Peat
Retirement Village Residents Association president