People who move into retirement villages can find it hard to get their money back. Photo / supplied
A Tauranga village is at the centre of publicity for not repaying a widow $790,000 ten months after she left.
Two sources and the village’s manager identified the place but Consumer did not
name it when it published the case of ‘Mary’, aged 80, who says she’s in financial limbo because she can’t get the $790,000 out that 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 a different place with hospital-level care. She couldn’t afford weekly fees at the village and for her husband’s hospital-level care.
So last September, she told the village operator she needed to go, terminate her licence to occupy and said she wanted to get her money back. She left 10 months ago in November
Consumer said occupation rights agreements which village residents signed required them to pay a lump sum, from $200,000 to more than $1.5m, for a licence to occupy the unit.
The woman’s daughter said she would only be repaid about $730,000 because the amount originally paid by her parents would not be returned in full.
Woodlands Boutique Retirement Village, Carmichael Rd, Bethlehem has two units for sale, each around $900,000.
On September 21, Parliament’s Social Services and Community Select Committee heard a submission from Consumer NZ complaining about non-repayments from villages. An urgent review of the law governing retirement villages is needed.
A Woodland’s spokesperson said it was a very small, family-owned retirement village.
“We do not have authority from any residents to make disclosures about their particular circumstances. We consider the trust and confidence our residents place in us to keep their privacy secure of paramount importance.
“We have one unit that has been vacant for resale for a period. We acknowledge it is stressful for any exiting resident to be delayed. That said, we have obtained four separate conditional contracts for sale on the unit during this period, however prospective residents have been unable to sell their homes in the face of a challenging real estate market,” Woodlands said.
The weekly fee had been reduced by 50 per cent after six months.
“The exiting 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 through this process,” the spokesperson said.
Woodlands understood the complainant’s frustration and welcomed the complaints process to enable it to respond and give balance to the complaint
Accounts show the village making an operating profit before other income of $151,340 in 2020 but falling to $149,725 for the year to March 31, 2021. Woodlands Boutique Village’s annual return showed a $1.2m profit for the 2021 year, compared to a $457,000 loss in the previous year.
The change was largely due to the fair value movement in investment properties, down $880,504 in 2020 but up $951,691 in the 2021 year.
Net profit after tax was $1.2m in 2021, up on the $457,731 loss in the previous year which included the $824,000 property value writedowns.
“Woodlands Boutique Retirement Village is a small, family-run retirement village in the heart of Bethlehem, Tauranga with a focus on affordable, high-spec, eco-friendly homes for those who wish to retire in style,” the business says.
It is advertising Hinau as a two-bedroom plus office unit, with a single garage and solar panels included. “The generous master bedroom includes a walk-through wardrobe and ensuite bathroom, and is ready for you to move in today,” the business says.
Advertising for a second unit Kahikatea says it is 170sq m with a single garage.
Weekly fees for each unit is $188.
The softening property market is said to be one of the reasons for lack of a sale. People wanting to buy into Woodlands can’t get the prices or offers they want on their own homes to enable them to settle on a retirement village unit.
Notes to the accounts said although Woodlands made a profit for the March 2021 year, it was still dependent on the continued support of its related parties including shareholder advances from Woodlands Trust.
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 – from the deferred management fee and the weekly fees.”
Despite the wording of the agreement clearly stating the 7.5 per cent per annum deferred management fee accrued until Mary’s unit was relicensed, the village insisted, in a statement to Consumer NZ, that her fee does not continue to accrue.
Consumer said sadly, there were many more retirees in Mary’s situation.
Graham Wilkinson, president of the Retirement Villages Association which represents owner-operators, said fees had to be cut by 50 per cent after six months once a resident had left.
Mary’s situation was “perplexing” because it wasn’t the experience most people had, he said.
About 77 per cent of residents the association surveyed had money repaid within six months of leaving a village.
Most residents “left” because they died, and their estates were paid out.
“The average period for repayment of money from a unit’s sale is only four months, and more than 100 New Zealanders move to villages weekly,” Wilkinson said today in response to the Consumer article.
The village Consumer was citing was smaller, with only about 17 units and it did not have the financial strength to repay people immediately.
But most units were in much larger villages owned with wealthier owner-operators.
The association said it was trialling a new best-practice standard for villages to pay interest on money tied up in property if units weren’t sold within nine months of a person leaving.
It planned to make that mandatory that next year if there were no unintended consequences from that change, Wilkinson said.
Read More: Named: Retirement village keeping widow’s $790,000 for 10 months after leaving