Building and Construction Minister Maurice Williamson announced today that owners of retirement village units will soon be entitled to the original capital sum of their investment following situations such as the Canterbury earthquakes.
"I have made an important variation to the Retirement Villages Code of Practice 2008, to address issues highlighted by the earthquakes of 2010 and 2011," Mr Williamson says.
The variation, which takes effect from October 2013, means deferred maintenance charges will not be deducted from the original capital sum in a no-fault termination situation, such as an earthquake or other natural disaster.
Previously, a retirement village operator could choose to deduct deferred maintenance charges from the original capital payment unless the Occupation Right Agreement had a higher requirement.
"The earthquakes destroyed some retirement villages in Canterbury which will not be rebuilt, and we needed to look at how the Code of Practice was set up to deal with those situations," Mr Williamson says.
"Greater clarity was needed around insurance obligations and processes for operators and residents in no-fault exit situations."
"The Code is a vital tool for ensuring retirement villages work in a fair, equitable way. The variation gives retirement village operators and residents greater certainty," Mr Williamson says.
The Code retains its flexibility, allowing operators to exceed its provisions if they wish, and operators can incorporate the variation before next October.