Retirement Villages: Things to Consider

Considering a Retirement Village?


Moving to a retirement village is appealing to many ageing Kiwis. However, its not the same as owning your own home, and not entirely what you’re used to. If you are weighing up the pros and cons of living in a retirement community, our team can help you navigate the next chapter of your life.



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Moving to a Retirement Village

Entering into a retirement village should be seen as a lifestyle choice, not an investment. Retirement homes offer the opportunity for independent living while providing access to support and healthcare.

Positives include greater security, companionship, no house maintenance and access to support and healthcare. Downsides include limitations on the use of the unit, no capital gain and a deferred management fee structure.

However, for most residents, financial considerations outweigh the lifestyle offered.

Consider the following points, amongst others:

  • What are the facilities and services available?
  • How close is the village to family and friends?
  • Will the weekly fee increase?
  • Can you stay in the village if you need more care?
  • What type of legal interest do you acquire?

Buying into a retirement village is different from buying a house. You are purchasing the right to occupy the unit and use the facilities and services in the community. You do not acquire ownership rights.

Your expenses will include the following:

  • A Capital Sum similar to a purchase price.
  • A Village Fee: a monthly or weekly fee that covers costs like rates, insurance, maintenance, security and gardening. In some villages, this fee could continue until the resident’s unit is reoccupied.
  • Utilities: these include electricity, telephone, contents insurance. Generally, you are not responsible for insuring the unit.
  • Personal expenses: medical costs, regular household and personal purchases.

There can be significant costs associated with leaving a village and selling the unit. Often, you will have to wait until the unit is sold before getting your money back. You will not receive any capital gain and will not generally get back what you paid for the unit. In some cases, you may also be required to pay for any capital loss made on resale of the unit.

The village will deduct a Deferred Management Fee upon sale. This fee is a percentage of the capital sum over a number of years. Typically, the fee is capped at between 20-30% accruing over three to five years. This covers costs such as communal facilities, management, or long term maintenance.