John Collyns, Executive Director of the New Zealand RVA, has told a review of the sector by the NZ Ministry of Housing and Urban Development (MHUD) it cannot support mandatory repayments. Interest paid after nine months would be OK.
"The sector's funders have told us that a mandatory buyback regime could reduce or eliminate bank appetite to fund the sector," John said in a submission to the review.
"A mandatory requirement to pay residents out within any specific timeframe would reduce consumer choice, increase costs for residents, slow down new village development, and result in insolvency for some smaller village operators in regional New Zealand."
The country’s big six companies - Ryman Healthcare, Metlifecare, Summerset, Arvida, Oceania, and BUPA - own about 66% of the sector, with the balance owned privately or by small Not For Profit or community organisations often in regional or rural areas.
John said most vacant units were sold in about six months, and the industry accepted that if sales took longer, it was fair that residents should be compensated.
"Rather than penalising the efficient as well as the tardy by imposing a statutory deadline for refunding the outgoing residents' capital, we support MHUD's proposal that operators pay interest on the outstanding amount. We support this obligation starting after nine months."
The former Labour government ordered the MHUD review of the sector's 20-year-old legislation amid a wide range of complaints the law was out of date and offered little consumer protections to residents.
More than 50,000 people live in retirement villages and homes, with demand expected to rise as the population ages in New Zealand.
