People who move to retirement villages may struggle to get their money back. Photo / provided
A Tauranga village is at the center of publicity for failing to repay a widow $790,000 ten months after she left.
Two sources and the village director identified the location but Consumer did not
name it when he published the case of 80-year-old “Mary,” who says she’s in a financial vacuum because she can’t withdraw the $790,000 she paid.
She left the village after only a year, but soon after, her husband was diagnosed with terminal cancer and had to be moved to another location with hospital care. She could not pay the weekly fees in the village in addition to her husband’s hospital care.
So last September she told the village operator she had to leave, terminated her occupation permit and said she wanted her money back. She left 10 months ago in November.
The consumer said occupancy rights agreements signed by village residents required them to pay a lump sum, ranging from $200,000 to more than $1.5 million, for an occupancy license of the unity.
The woman’s daughter said she would only be reimbursed approximately $730,000, as the amount originally paid by her parents would not be fully refunded.
Woodlands Boutique Retirement Village, Carmichael Rd, Bethlehem has two units for sale, each for around $900,000.
Yesterday the House Committee on Community and Social Services heard a brief from Consumer NZ complaining about the Villages’ non-reimbursement. Consumer NZ said an urgent review of the law governing retirement villages was needed.
A spokesperson for Woodlands said it was a very small family retirement village.
“We do not have the power of any resident to disclose their particular circumstances. We consider the trust our residents place in us to protect their privacy to be of paramount importance.
“We have a unit that has been vacant for resale for some time. We recognize that it is stressful for any outgoing resident to be delayed. That said, we have secured four separate conditional contracts for the sale of the unit during this period, but would-be residents have been unable to sell their homes in the face of a tough real estate market,” Woodlands said.
The weekly fee had been reduced by 50% after six months.
“The outgoing resident of the vacant unit has made a formal complaint under the code of practice issued under the Retirement Villages Act 2003 and we are working constructively throughout this process,” said the spokesperson.
Woodlands understood the complainant’s frustration and welcomed the complaint process to allow him to respond and bring balance to the complaint.
The accounts show the village making an operating profit before other income of $151,340 in 2020, but falls to $149,725 for the year to March 31, 2021. Woodlands Boutique Village’s annual return showed a profit of $1.2 million for the year 2021, compared to a loss of $457,000 in the previous year.
The variation is largely attributable to the variation in the fair value of investment properties, down $880,504 in 2020, but up $951,691 in 2021.
Net income after tax was $1.2 million in 2021, up from the prior year’s loss of $457,731, which included property value write-downs of $824,000.
“Woodlands Boutique Retirement Village is a small, family-run retirement village located in the heart of Bethlehem, Tauranga, which focuses on affordable, upscale and eco-friendly homes for those who want to retire in style” , says the company.
It advertises Hinau as a two bedroom unit plus an office, with a single garage and solar panels included. “The generous master bedroom includes a dressing room and an en-suite bathroom, and is ready to welcome you today,” says the company.
The advertisement for a second unit, Kahikatea, states that it is 170 m² with a single garage.
The weekly charge for each unit is $188.
The slowdown in the real estate market is said to be one of the reasons for the lack of sales. People who want to buy in Woodlands cannot get the prices or offers they want on their own homes to allow them to move into a retirement village unit.
The notes to the accounts indicate that although Woodlands made a profit for the year to March 2021, it was still dependent on continued support from its related parties, including advances from Woodlands Trust shareholders.
Nigel Matthews of the Retirement Village Residents Association said: ‘This village has a vested interest in not selling this villa as they are still making money from it – thanks to deferred management fees and weekly fees.’
Despite language in the agreement clearly stating the deferred management fee of 7.5% per annum accrues until Mary’s unit receives a new license, the village insisted, in a statement to Consumer NZ, to that its costs do not continue to accumulate.
Consumer said sadly that there were many more retirees in Mary’s situation.
Graham Wilkinson, president of the Retirement Villages Association, which represents owner-operators, said fees were to be reduced by 50% after six months, once a resident had left.
Mary’s situation was “puzzling” because it wasn’t the experience most people had, he said.
About 77% of the inhabitants questioned by the association were reimbursed within six months of leaving a village.
Most residents “left” because they died and their property was paid for.
“The average repayment period for money from the sale of a unit is just four months, and more than 100 New Zealanders are moving into villages every week,” Wilkinson said today in response to the article from Consumer.
The village cited by Consumer was smaller, with only about 17 units, and it did not have the financial capacity to reimburse people immediately.
But most units were in much larger villages owned by wealthier owner-operators.
The association said it was testing a new best practice standard for villages to pay interest on money tied up in property if the units were not sold within nine months of a person leaving.
He planned to make it mandatory next year if there were no unintended consequences of this change, Wilkinson said.