Cave Financial Services

Considering Retirement Village Living?

Mon Dec. 2nd 2019

Considering retirement village living?

They're not all the same – here's how to choose

You might feel ready to leave the family home for something smaller and more manageable, and a retirement village could be exactly what you want. But buying or leasing a dwelling in a retirement village is not the same as buying a house – there are complicated legal issues, and villages are not all the same in what they offer.

Here are some things to think about if you're considering retirement village living.

Be clear on what's important to you

Even within the same overarching company, each village is unique. Some are right in the city, some are by the ocean, some feature bush walks and some are even known for competitive sports. They have a range of dwelling types from single-storey villas to multi-storey apartment buildings, and varying levels of care on site. Some are old and established, while others are brand new and still building dwellings.

To find just the right village for you, start by making a list of must-haves, and another of desirables (but not essential). You can use a comprehensive checklist from Sorted, which has all the aspects of retirement village living – health care, comfort, activity, location and more. Some of the questions won't apply to your situation, but you know you won't be leaving out any considerations.

Be sure to discuss your plans with family – they may raise issues you haven't thought of. Will they be welcome to visit, and is the village you're considering close to where they live? If you're looking at one or two villages in particular, pay them a visit. Talk to the residents and get a better feel for what it would be like to live there.

Make yourself aware of the costs

Moving to a retirement village involves some complicated costs. These include the purchase price of your new home, and an ongoing fee for services such as gardening, laundry, cleaning and meals. The costs will be different at each village, and will depend on your own circumstances – whether you'll live independently or need more help day to day. Also, be aware that as you age you are likely to need more care, and may transition from independent to assisted

living down the track. It pays to compare what various villages offer, while keeping an eye on your future needs.

Leaving your village for one that offers hospital-level care will come with costs, as does shifting dwellings within the same village. To help you work out what you can afford, what to ask each village you're considering, and things you may not have thought of, try this financial checklist.

Get independent legal advice

The Retirement Villages Act requires you to access independent legal advice before you take the plunge, so be sure to employ a lawyer who has particular expertise in retirement villages. A good place to start is the Law Society, where you will be given names of suitably experienced lawyers to choose from.

Some of the complexities your lawyer will consider are the ownership and financial viability of a particular village, its financial and legal titles, what the entry and ongoing costs are likely to be, and what the transfer and/or leaving costs are. Your lawyer will help you ask the tricky questions, understand the answers and ensure that your choice is realistic for your budget.

Understanding the legal titles

There are four basic legal titles commonly used for retirement villages: a licence to occupy, a unit title, a cross lease or a lease for life. The Retirement Village Act requires the inclusion of a memorial in any legal title, so residents' property interests are protected and the village can continue to operate.

Licence to occupy

Offered by most NZ retirement villages, this gives you the right to live in your dwelling, but not to own it. Unlike owning a residential property, you won't usually be able to borrow against your dwelling, except as offered by some villages.

Unit title

In this structure, you own your unit as a member of a body corporate. That means that you and other residents pay to maintain communal areas. Often a village manager oversees the daily operation of the village and the body corporate.

The licence to occupy and the unit title are combined in some villages.

Cross lease

In this title, the land and its units are owned by all the residents, and they grant leases to one another. Each lease agreement includes the length of the lease, land use and the right of a resident to live there.

Lease for life

As the name suggests, you lease a dwelling in the village until you die or leave. In some villages, you can also choose to rent a unit.

To get a better handle on your retirements savings so you know which retirement villages to look at, talk to Cave Financial today.


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