Retirement villages
The middle option between staying at home and a rest home. How they work in NZ, how the contracts are structured, and what to check before signing.
A retirement village is not a rest home. It's an independent-living community for people who can still look after themselves. You pay for security, social connection, and (often) the option to transition into care later without moving towns. About 50,000 New Zealanders live in villages.
How villages work — the ORA contract
Almost every village in NZ uses an Occupation Right Agreement (ORA). This is a licence to occupy the unit — not freehold ownership. Three financial pieces matter:
- Entry price — what you pay to move in. Comparable to local property prices for similar units, but you don't own the underlying property.
- Weekly fee — covers rates, insurance, maintenance, shared facilities. Typically $150–$250/week. Usually fixed for the duration of your residency in most villages.
- Deferred Management Fee (DMF) — the village's profit. Deducted from the entry price when you leave. Typically 20–30% of the entry price, accruing over the first 3–5 years.
When you leave (or die), your estate gets back: entry price − DMF − any capital gain (kept by the village in most contracts) − refurbishment costs.
Translation: villages are for living, not investing. The longer you stay, the better the per-year value — but you'll never grow capital the way you would in a freehold home.
What you might pay (illustrative)
| Item | Typical range |
|---|---|
| Entry price (1-bed apartment) | $400,000–$700,000 |
| Entry price (2-bed villa) | $700,000–$1,200,000 |
| Weekly fee | $150–$250 |
| Deferred Management Fee | 20–30% of entry price |
| Refurbishment on exit | Variable — read the contract |
| Capital gain share | Usually 0% to resident |
Pricing varies hugely by region, village brand, and unit type. Auckland and Tauranga are at the top of the range; smaller centres are well below.
The capital gain trap
If your parent sells a $900,000 freehold home and pays $700,000 to enter a village, that money is no longer growing. Ten years later the same house might be worth $1.4m, but the village unit's "capital gain" usually goes to the operator, not the resident. Many families don't realise this until later. It's a fair trade for some people; a poor one for others.
What villages typically include
- Independent units — apartments, townhouses, or villas with private kitchens and bathrooms
- Shared facilities — community lounge, dining room, library, gym, pool, hairdresser
- Activities — exercise classes, outings, social events, hobby groups
- Care continuum — many villages have rest home and hospital-level care on site, allowing transition without leaving the village
- Emergency call — pull cord or pendant in each unit
- Maintenance — exterior maintenance, gardening, often appliance servicing
- Security — gated entry, neighbours nearby
Who villages suit
- People who are independent now but want care available later without moving towns
- Widowed people who find a large family home isolating
- People who want social contact built into where they live
- Families who don't want to inherit capital gains (or who have already discussed this openly)
- People who can comfortably afford to lock up capital they will not get back in full
Who villages don't suit
- People hoping to leave a large inheritance from the family home
- People whose home is their main asset and they need access to the equity (consider a reverse mortgage instead)
- People who already have a rich social and care network where they live
- People with care needs that already exceed independent living — a rest home is the right starting point, not a village
Read the contract — twice, with a lawyer
By law, your parent must get independent legal advice before signing an ORA, and the operator must give them the village's Disclosure Statement. Read both. Pay particular attention to the DMF percentage, capital gain treatment, refurbishment liability, weekly fee inflation rules, and the exit timeline (most villages don't pay the resident or estate back until the unit is re-licensed, which can take months).
Questions to ask before signing
- What is the DMF percentage and when does it accrue (e.g. straight-line over 3 years vs 5)?
- Who keeps the capital gain — me or the village?
- What is the weekly fee, and how can it change while I live here?
- What does "refurbishment on exit" cover, and who decides?
- How long does it take to get the exit payment after I leave or die?
- Is there care on site (rest home / hospital / dementia)? What happens if I need it — am I prioritised for entry?
- What is the staff turnover in the care facility?
- What's the village's most recent Retirement Villages Act audit / financial position?
- Can I get a 6-month "trial" or short-term lease before committing?
How to compare villages
- Village Guide — directory of NZ villages, searchable by region and operator
- Eldernet — covers villages and rest homes
- Te Ara Ahunga Ora Retirement Commission — government-funded consumer guide, model contracts, complaints info
- Visit at least three. Eat a meal. Talk to current residents (not just the marketing team).
Free help comparing contracts
The Retirement Villages Residents Association of NZ (RVR) offers free guidance to people considering villages. Te Ara Ahunga Ora (Retirement Commission) publishes plain-language guides at cffc.govt.nz. Your lawyer is required to explain the ORA before signing — don't skip that step.
Sources
Retirement Villages Act 2003 and Code of Practice 2008 (and amendments) regulate the sector. Resident Advocate appointed by the Retirement Commissioner. Compare statutory protections at Te Ara Ahunga Ora — Retirement Villages. Sector overview from Retirement Villages Association.
The information on this page is general in nature and does not constitute legal, financial, or medical advice. Every family's situation is different — for advice specific to your parent, consult their GP, a Needs Assessor, or a qualified professional.
Dollar figures and entitlements change periodically. We link to authoritative sources where possible. Last reviewed: April 2026.