The Retirement Village Sector in New Zealand: Challenges and Reform articles

The retirement village sector is a cornerstone of housing and aged care for New Zealand’s elder population. Currently, entry into most retirement villages requires individuals to be 70 or older, positioning the sector as a vital response to the country’s rapidly aging demographic.

While new retirement village developments continue to produce high-quality living environments, affordability remains a pressing challenge. The sluggish property market exacerbates this issue, limiting access for prospective residents of moderate means. Not-for-profit operators often provide rental options, but private and frequently publicly listed operators focus on a continuum of care model, supporting residents aging in place. This model, while valuable, tends to price out less affluent elders due to high costs associated with dementia and hospital-level care — services accompanied by significant operational risks. Many private providers now rely on residential occupational agreements for these intensive care levels to manage this risk.¹

Following significant public input from village residents’ representatives, operators, and the Retirement Commissioner, the Government conducted a thorough review of the Retirement Villages Act 2003. The review addressed concerns around fairness and transparency, particularly regarding the process when residents leave their village homes—a period often marked by grief for families. As Associate Housing Minister Tama Potaka stated, “Our reforms are designed to reduce the stress families face when a loved one leaves a village, often during difficult emotional times”²

Residents typically occupy their unit—be it an apartment, villa, or care suite—under a Licence to Occupy known as an Occupational Right Agreement (ORA). Each ORA includes a Deferred Management Fee (DMF) of roughly 25–30% of the purchase price, deducted after the unit is resold and the new resident pays the purchase price. However, resale timelines fluctuate widely due to factors such as location, facility quality, and market competition. Many newer ORAs provide for interest payments if a resale is delayed past a certain period, but older agreements frequently do not, adding financial uncertainty for residents and their families. Grey Power New Zealand highlighted this concern, noting that “many older New Zealanders depend on their unit sale as part of their retirement fund; unpredictable resale delays can cause real hardship”³

The proposed reforms will simplify and standardize legal documents, require operators to clearly disclose their offerings, and define operator responsibilities for chattels owned within villages. A significant addition is a new independent disputes resolution scheme designed to provide residents accessible, faster, and less adversarial channels to resolve issues. The Retirement Commissioner applauded this balance, emphasizing that “the planned rule changes strike a necessary balance between residents’ and operators’ needs”⁴

Minister Potaka outlined several key reforms in detail:

• Allowing former residents to apply for early access to funds in specific circumstances of need
• Mandating interest payments if a unit remains unsold after six months
• Ensuring repayment of funds within 12 months after a unit is vacated
• Ceasing weekly fees and deductions immediately once a resident departs

These changes aim to bring greater financial certainty and reduce prolonged waits that have previously burdened families. As one media headline summarized, the government intends “to give certainty to families” during what is often a distressing transition⁵

The reform Bill is expected to be introduced to Parliament by mid-2026, followed by a Select Committee process to gather further input from residents, families, and operators, ensuring that the final legislation thoroughly addresses stakeholders’ concerns.⁶

In an environment where New Zealand’s elderly population is growing, these reforms mark a crucial step to safeguard their rights, improve transparency, and make aged care housing more equitable. The spotlight on procedural clarity and dispute resolution represents a meaningful attempt to ease the emotional and financial burdens on residents and their whanau.

1. New Zealand Herald, 2024 and Stuff.co.nz, 2025 ↩︎
2. Beehive.govt.nz, 2025 and RNZ, 2025 ↩︎
3. Grey Power NZ, 2025 ↩︎
4. Retirement.govt.nz, 2025 and Stuff.co.nz, 2025 ↩︎
5. 1News, 2025 and Beehive.govt.nz, 2025 ↩︎
6. HUD.govt.nz, 2025 ↩︎