Retirement villages, including a complex in Nelson, are being accused of misleading would-be residents by suggesting they are selling units they will in fact only lease.
Several hundred retirement villages around the country operate by selling the elderly licences to occupy units at a cost comparable with sales value.
Residents also pay a weekly fee for costs, including insurance, rates, maintenance, community facilities and village administration, but make no capital gain and forfeit a proportion of their original payment if they move out.
Recent advertising for the Silverstream Lifestyle Retirement Village in the Christchurch suburb of Papanui offers the elderly "the last chance to purchase a brand-new residence" and says "11 new villas . . . are for sale".
National retirement village chain Summerset is running advertisements in Christchurch for complexes in Nelson and Dunedin, and describes stages as "selling now" and "selling fast".
Neither company is in fact selling units to residents, and their advertisements last week did not explain the licence-to-occupy system or how residents are charged.
Christchurch lawyer Leo Steel accused both companies of misleading the elderly.
"A lot of people don't have experience of retirement villages, and they think they will be buying a home," he said.
"By the time it is explained to people they will not own their unit, they are locked into the idea mentally.
"They have owned their own home for years, and when they are paying $400,000 or $500,000 for a unit, they think they own it, but they cannot sell it or mortgage it or leave it to their family."
Mr Steel said some retirement villages were warned several years ago about their advertising practices, "and now it's starting to crop up again".
In 2000 the Securities Commission issued a discussion paper on retirement villages because of concerns at how the complexes were being marketed.
The Fair Trading Act makes it illegal for advertisers to mislead consumers, run "bait" advertisements, or give false information.
The Retirement Villages Act introduced in 2003 requires village operators to ensure their advertising is accurate, and provides for those breaching the rules to have their registration suspended by the registrar of retirement villages.
Bill Atkinson, chairman of Grey Power's retirement village committee, said advertising suggesting units were for sale was a "tactic" that had cropped up before.
"It is of concern that there are these sort of advertisements. They can definitely be misleading to older people.
"Some retired people don't speak up, they tend to trust anyone in high positions such as managers, and they won't question them."
Mr Atkinson said that while all would-be residents would need to obtain legal advice before moving into a village, that advice might not be thorough enough.
"It's my belief that there are not enough solicitors fully aware of the Retirement Villages Act or the code of practice, and are not necessarily able to advise intending residents."
Silverstream is owned by Silverstream Lifestyle Retirement Village Ltd, whose main shareholder, Christchurch businessman Lance Bunting, previously owned the Kate Sheppard Retirement Village, destroyed by earthquakes.
Silverstream shareholder Sue Bunting said the advertising for Silverstream was written with "artistic flair", but she did not believe it would mislead people.
"Everyone knows we are selling a licence to occupy. When they come in it is all explained and it's all in the brochure. And everyone has to get their own legal advice."
Summerset spokesman Tristan Saunders said the advertisements had been cleared by lawyers and he believed they were literally correct. He did not believe there was a need to spell out the licence-to-occupy scheme in advertisements.
"We find knowledge levels about retirement villages are very high. We've got nothing to hide or mislead people about," he said. Fairfax NZ
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