NZ retirement industry commits to resident wellbeing

New Zealand is on track to increase its number of retirement village units by half in the next few years in an environment where customer is king, writes John Collyns.

New Zealand is on track to increase its number of retirement village units by half in the next few years in an environment where customer is king, writes John Collyns.

New Zealand, like many Australian cities, is desperately short of houses. Prices for existing houses are high while finding suitable land to develop and tradespeople to build new dwellings is far from easy.

John Collyns

Retirement village operators are similar to organisations in the rest of the construction sector – our 413 registered retirement villages are planning to build around 17,000 units over the next few years, thereby increasing the existing retirement village stock by around 55 per cent.

The demand for retirement village units outstrips supply, which is a happy, if challenging, position for the industry to be in. The reason why demand is so high can be boiled down to a handful of factors:

  • increased availability of quality product and continuum of care services
  • public acceptance of  retirement villages as a mainstream housing option for older people
  • resident-focused consumer protection legislation
  • ability to release equity in property due to increased property values and mobility of capital
  • residents perceive an improved sense of security, companionship and physical activity
  • industry commitment to improving the regime.

To expand on these rather minimalist observations, the New Zealand retirement living sector has invested heavily in researching and then delivering what their intending residents want.

We’ve found that 80 year olds are looking for four main things – a warm, secure, age-appropriate place to live; friends and family nearby; enough money to live on; and a pathway to care should that be needed.

Villages are – or at least, should be – exemplars of good design for older people. Our residents are happy to leave their old, dilapidated and unsuitable family home for a modern, universally designed retirement village unit.

Around 75 per cent of New Zealand villages provide a continuum of care so village residents know that if they need a residential care bed, they will have first call on one.

Almost 13 per cent of the 75-plus population, which is more than 40,000 people, choose to live in a retirement village. That penetration rate has continued to increase each year, up from around 9 per cent in 2013. The reason for this is that retirement villages are an accepted mainstream housing option for older people.

City councils encourage village development through positive planning rules and long-term plans acknowledge that villages are part of the solution for housing an ageing population. Councils also recognise that every new unit built and every unit resold releases a family home back to the market for a new family to enjoy, thus making a positive contribution to the housing shortage. Currently around 4,500 homes are released annually in this way. It’s no surprise that councils want to encourage development.

The Retirement Villages Act makes consumer protection a priority. Villages must be registered with the Registrar of Retirement Villages and once registration is complete, a suite of protections are put in place. Those protections include residents having priority over village creditors, a statutory supervisor looking after their financial interests and all intending residents having mandatory legal advice before signing their contracts.

There’s far more than this of course but transparency and informed decision-making are at the core of NZ’s retirement village regulatory regime, which is acknowledged as being world-leading.

The miracle of equity release means that asset-rich but cash-poor older people can sell their family home and move to a retirement village, often adding hundreds of thousands of dollars to their retirement savings. This makes all the difference between living hand-to-mouth while watching one’s principal asset deteriorate and really enjoying all that life has to offer, such as travel, family staying over, eating out or just not having to worry about the next power bill or repairing the roof.

Research shows that some 20 per cent of retirement village residents released more than $200,000 when they sold up and moved to the village and the business model deliberately prices units at around 75 per cent of the average freehold home price in the area where the village is situated.

An apartment block in Russley Village in Christchurch, New Zealand.

A few years ago we engaged research organisation McCrindle to survey our residents. McCrindle are experienced retirement village researchers in Australia so we were keen to get their expertise in New Zealand.

They surveyed some 1,300 randomly-selected retirement village residents from across the country and asked about their sense of security, fitness and social activities, amongst other things.

In addition to a net promoter score of +47 across the industry as a whole – one of the highest pan-industry scores – 66 per cent of our residents reported a greater sense of security and an improvement in their social life while a third reported  they were more active since they’d moved to a village. These all go towards combating the serious health problems around social isolation as well as making sure residents fit into a community of like-minded people.

Basic day-to-day village management is contained in a legislative code of practice, but this is just the minimum standard. Despite enjoying world-leading consumer protection, our members are committed to improving the regime.

For example, while the code allows weekly fees to be charged for as long as it takes to resell the unit, some operators cease charging them as soon as the resident moves out. Others fix weekly fees for as long as the resident lives in the village while others start to pay back the deferred management fee at the same rate it was accrued if the unit takes longer to resell. Aware that important information can be obscured in the documents, our team has developed a key terms summary, which is a template to allow residents to compare terms and conditions easily between different villages.

We also require members to undertake a compliance audit every three years because there’s no government agency that does so.

We believe the industry’s success lies in a commitment to residents’ wellbeing. Retirement villages are more than just a property asset; unless they have their customers at the heart of the business they are more likely to fail. Residents tell us they wish they’d moved in years earlier – there are very good reasons for that.

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John Collyns is executive director of the Retirement Villages Association of New Zealand, a national membership association representing operators, developers and managers of retirement villages.

This article appears in the current July-August edition of Australian Ageing Agenda magazine.

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