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RTV97

Retirement Villages

NZ $33.00
incl GST
Author(s): Peter Jones, Helen Melrose
Published: 7 April, 1997
Pages: 110

   


Introduction


The significant increase in aging populations is presenting challenges on a broad front, not just in New Zealand but world-wide. Housing the “geriatric generations” is an especially challenging issue, involving as it does, questions of variety of housing, deteriorating health, desire for independence and affordability.

One aspect of the provision of housing the elderly is the subject of this paper - retirement villages. This paper particularly addresses aspects of retirement villages from the point of view of advisers to a resident, rather than a developer.

The focus of this paper is on describing the structure of retirement villages and their components, rather than embarking on a detailed legal analysis. The fact of the matter is that people considering moving into a retirement village have often made up their minds to move into a village based on a number of factors which have nothing or little to do with the detailed legal structure of a village. It remains for an adviser, then, to describe the legal obligations and rights to their clients so there are no surprises. An adviser is often unlikely to be able to change the client’s mind unless there are serious issues, and is exceedingly unlikely to be able to persuade a village owner to change any aspect of the structure or document content.

Commercially owned and operated retirement villages are a relatively new development, being initiated in New Zealand only over the last 15 years or so. They are rapidly increasing in numbers and market acceptance. They come in all shapes and sizes - from a small cluster of houses with some limited shared facilities, to a large “mini-suburb” with houses, apartments, extensive community facilities, and, sometimes, rest homes. Very occasionally hospitals are associated with a village.

There are a variety of owners as well, from commercial organisations to ethnically based charitable trusts and religious and welfare groups. These latter groups include the Masons and the mainstream churches. One village has a trust formed by a group of residents as its owner.

A new initiative in New Zealand, which is likely to gain increasing acceptability, is the Abbeyfield type of housing which was originally developed in the United Kingdom. This concept comprises houses where carefully selected and often self-selected groups of older people “flat” together. There are moves to adapt this concept in New Zealand to the resident-funded concept of retirement village living.

These days the philosophy of the provision of health care to older persons seems to be aimed at endeavouring firstly, to encourage people to care for themselves, and then to provide care to people in their own homes. There are financial disincentives to entering the traditional rest home and as a consequence, rest homes seem now to be concentrating on providing care for quite ill or disabled people.

All of this leads to the need to provide a wide range of accommodation options which cater for older people, often with deteriorating health.

Statistics New Zealand in their book “New Zealand Now 65 Plus” (May 1995, p 25), note that by 2031, around 19% of the total population will be elderly, with an age range from 65 to over 105. This compares with 11% in 1991. In 2031, of these elderly persons, nearly 4000 will be aged 100 years or more.

Statistics New Zealand (“New Zealand Now 65 Plus”, May 1995, p 77) observes that, relying on studies in France, Northern Ireland and the United States,

 
The rate at which disability-free life increases is not as great as that of total life expectancy. This means that while people live longer “well”, they also live longer “disabled”.

While a consequence of this is the impact on health costs and health care facilities, it is also a pointer to the need to provide secure environments such as retirement villages, where services and facilities are provided to cater for “mild” disabilities.

There is also the rather new phenomenon described by Dr Judith Davey of Victoria University, Social Policy Group as “geriatric generations”. People, on attaining 65, will more and more frequently have parents still alive and may have responsibilities for them. Dr Davey has described this phenomenon rather amusingly as:

 
A worst case, scenario may be: You are 90, looking after your parents who are 120, and your 60 year old child comes home! (New Zealand Retirement Villages Association (Inc) publication, Retirement Views - December 1996)

It is against this background that older clients may approach their lawyers for advice on their housing options.

If the housing option chosen is a retirement village, then there is an ever-increasing range of choices. The New Zealand Retirement Villages Association Inc (“NZRVA”) commissioned a survey in 1996 which resulted in the publication of a report entitled “The New Zealand Retirement Village Industry”. The report of this survey analysed 120 villages with a population of 9,523. The villages included 62 “not-for profit” and 58 “for-profit” villages and were spread throughout New Zealand. Extracts from the report are annexed as Appendix 1.

The predominant form of title in the villages surveyed was found to be:
  • Licence to Occupy 57%
  • Lease 18%
  • Freehold 20%
  • Other 5%.

The size of each village ranged from 5 people to 560 people.

Location is probably the first factor prospective residents will consider. They will then need to look at what a particular village can offer, and whether it matches their needs - short to medium term.

Larger villages often comprise a range of detached or semi-detached units, apartments, and serviced apartments. They often allow for transferability within the village, and provide facilities such as 24 hour on-call nursing assistance, a restaurant, and security. House and garden maintenance is taken care of. There is also often a range of optional recreational facilities available. Some villages also include a rest home facility. Even less frequently, a hospital may form part of the village.

Smaller villages may be more focused around a rest home facility, with the provision of some serviced apartments and units being a natural adjunct to this facility. There is likely to be less choice in recreational facilities in such villages, but the important things such as nursing care, meal provision, and security will invariably be available. Other smaller villages may be no more than a cluster of houses with some limited services, such as house and garden maintenance provided, where people of a similar age group can live.

As mentioned above, for many prospective residents, the above issues are the matters of primary importance. The legal structure and security of investment come a poor second.


 

Content outline

  • Title structure
  • Advantages of title structures
  • The financial struture
  • Risks
  • Funding arrangements
  • Termination of occupancy
  • Transferability
  • Privacy Act
  • Use of facilities and the provision of services
  • New Zealand Retirement Villages Association Incorporated
  • Dispute resolution
  • Family trusts and life interests
  • Equity release schemes
  • Securities Act issues
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