What advice, if any, and from whom specifically, has the Associate Minister of Housing received on whether the financial benefits obtained by retirement village operators, from retaining outgoing residents’ capital, have been considered as part of the Government’s review of options for earlier capital repayment?

Answer

Over the course of 2025, I received advice from Te Tūāpapa Kura Kāinga – Ministry of Housing and Urban Development (the Ministry) on the potential impacts on retirement village operators of introducing a maximum repayment timeframe (of various lengths) for residents’ capital sums. Note that the functions of the Ministry transferred to the Ministry for Cities, Environment, Regions and Transport on 1 July 2026. I received advice from the Ministry on 9 June 2025 (Options for incentivising or requiring earlier capital sum repayments HUD2025-007193) which outlined the risks associated with short maximum repayment timeframes. The Ministry’s advice noted retaining sufficient capital to meet a short maximum repayment timeframe would mean operators would forego the opportunity cost of the utilisation of that capital, as well as: • risk the reduction of services, amenities, and maintenance in villages. • risk the further development of retirement villages and aged care facilities. • put the greatest pressure on smaller and older independent retirement villages that are less well-capitalised than larger retirement villages. The Ministry’s advice also noted that, because retirement village unit prices are broadly correlated with the housing market, operators may not be able to fully pass on increased costs to residents. Therefore, operators would need to build up capital reserves or arrange a line of credit to meet new requirements. The advice I received from the Ministry considered various factors, including consumer protections for residents, fairness, costs to operators and residents, and impacts on the viability of the retirement villages sector.