Fees that residents pay may include the following:
This one-off payment secures a resident´s, or someone else´s, right to live in the retirement village.
General services charges
These charges pay for services you supply or make available to all village residents.
They can include:
- management and administration
- gardening and minor maintenance
- recreation or entertainment facilities
- other services specified in the contract.
Residents may have to pay the general services charge in full for up to 90 days after they vacate the unit, unless the unit sells earlier.
After the 90 days, you and the resident share the cost of the charge in the same proportion as you will share the income from the unit resale.
You may accrue the resident´s proportion of the charge as a debt and reduce the amount you pay in exit entitlements. Do not charge interest on the accrued amount.
The resident pays their share for nine months or until the unit is sold, whichever comes first. If a unit is vacant or has no contract on it, you must pay the proportion of the whole general services charge that relates to the unit.
Amount to charge
The current public information document (PID) contains the amount you can charge a resident for general services and how you calculate the charge.
You cannot charge more than indicated in the PID, or include any amount that goes towards replacing capital items or paying Tribunal costs. However, you can charge GST on the charge.
Preparing a budget
You must prepare a budget for general services charges each financial year to plan for these costs. Monitor actual expenditure against the budget.
Carry forward any surplus or deficit at the end of the financial year, and account for the amount when preparing the following year´s budget.
If requested, give the residents´ committee a copy of the budget at least 14 days before the financial year begins.
The committee must request this in writing at least 28 days before the financial year begins.
Increasing general services charges
Laws apply to increasing general services charges. You must consider more cost-effective alternatives before increasing any charge.
The residents´ committee can request a document that explains any budget increases.
Generally, you cannot increase the general services charge by more than the CPI percentage increase, unless the residents´ committee approves the extra increase by special resolution.
Residents must also pay an increase that relates to:
- rates, taxes or charges on the village
- a village employee´s salary/wages (if the law demands an increase)
- insurance premiums or excesses
- maintenance fund contributions.
New general services
The residents must approve any new general services charge by special resolution at a residents´ meeting. A special resolution must achieve 75 per cent support.
Before supplying the services, you must get at least two quotes from qualified trades people, unless getting two quotes is not practical for exceptional reasons.
Give the residents´ committee copies of the quotes.
You must pay the costs of getting the quotes. If you need capital improvements in order to provide the services, the residents must pass a special resolution asking you in writing for the capital improvement.
Do not charge residents for the new service before you supply it.
Personal services charge
This charge pays for optional personal services that residents may use, such as meals, cleaning and laundry services. You and each resident negotiate personal services as part of the contract.
Residents are not responsible for these charges beyond 28 days after they leave the village.
Exit fees are usually set as a percentage of the ingoing contribution. A resident may have to pay this amount to you when they leave the village or when you sell their right to reside.
In addition to the exit fee, a resident may have additional charges including general service charges, personal services charges, outstanding fund contributions, expenses from the unit resale and other costs covered in the contract. These are deductions that determine exit entitlement.
You must give the resident a statement that outlines their total fees.
Calculate the exit fee on the day the resident leaves the unit or three months after their right to reside is terminated.
For residence contracts entered into on or after 1 March 2012, if the exit fee is worked out based on the length of time the resident has resided in the village, the exit fee is calculated on a daily basis.
As the operator, you must insure the retirement village to full replacement value, including accommodation units (if not owned by residents) and communal facilities.
Insurance must cover damage and the cost of restoring buildings to previous condition, including professional fees and cost of removing debris.
It must cover damage from earthquake, explosion, fire, lightning, storm, water, glass breakage or malicious acts. It must also provide for public liability.
Residents who own their own units must insure their own home. All residents are responsible for insuring their contents.