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For many New Zealanders, moving into a lifestyle village is an exciting next chapter. It can mean less time spent maintaining a home, more opportunities to socialise, and the reassurance of living in a supportive community.

However, buying into a retirement village is quite different from buying a house. The legal and financial arrangements can be complex, so it’s worth understanding exactly what you’re signing up for before making a decision.

Usually you are not buying the property

One of the biggest surprises for many people is that, in most lifestyle villages, you’re not actually purchasing the unit itself. Instead, you’re buying the right to live there under an Occupation Right Agreement (ORA).

An ORA gives you the legal right to occupy a particular unit, but ownership of the land and buildings generally remains with the village operator. The agreement sets out your rights and responsibilities, the village’s obligations, the fees you’ll pay, and what happens when you eventually leave the village.

Because every village has its own agreement, it’s important not to assume they’re all the same.

Financial considerations

While lifestyle villages offer many benefits, there are also financial considerations that deserve careful thought.

Most villages charge what’s known as a Deferred Management Fee (DMF), sometimes called an exit fee. This fee is usually deducted from the amount repaid when you leave the village and can often reach 20 to 30 percent of your original entry payment.

Unlike owning your own home, you generally won’t receive any increase in the property’s value if house prices rise. In many ORA arrangements, the village operator retains any capital gain when the unit is re-licensed.

It’s also important to understand ongoing village fees, how long those fees continue after you leave, and when your capital will be repaid. These arrangements vary considerably between villages, making it essential to read the agreement carefully.

Different ways to buy-in

Although Occupation Right Agreements are the most common arrangement in New Zealand, they’re not the only option.

Some villages are structured using unit titles, where residents own their unit much like an apartment owner. Others offer freehold or leasehold ownership, while some lifestyle villages allow residents to share in any future capital gain when they sell. These arrangements are less common and depend on the specific contractual structure offered by the village.

Moving into a retirement or lifestyle village can be a wonderful lifestyle choice, offering convenience, companionship and greater peace of mind. But every village is different, and every Occupation Right Agreement has its own terms with different legal and financial consequences, so it’s important to understand which model you’re considering before signing any documents.

Legal Advice is important

An Occupation Right Agreement is a significant legal contract and often represents one of the largest financial commitments people make in retirement.

Independent legal advice isn’t simply a formality—it gives you the opportunity to fully understand the agreement before making a decision. A lawyer can explain how the repayment provisions work, identify any unusual terms, discuss the fee structure, and ensure you understand your rights and obligations.

Just as importantly, legal advice provides an opportunity to ask questions and compare different village arrangements so you can choose the option that best suits your circumstances and long-term plans.

Thinking about moving to a lifestyle village?

Before you sign an Occupation Right Agreement or sell your family home, our team can help you understand your rights, explain the financial implications, and review the agreement so you can make an informed decision that supports both your lifestyle and your financial future with confidence.

Note: The Retirement Villages Act 2003 and its associated regulations and codes are currently under review, with significant changes to amend the retirement village regime being considered by government.

Disclaimer: This article provides general information only and does not constitute legal advice. Retirement village agreements vary significantly between operators. Anyone considering entering into an Occupation Right Agreement or purchasing a unit in a retirement or lifestyle village should obtain independent legal advice before signing any documentation.