Refinancing – things to consider before switching banks

If you are approaching or have already reached 65 years and think you may require long-term residential care, did you know you may be entitled to a residential care subsidy? What is the average cost of residential care in NZ per annum? This annual cost of residential care varies based on a range of factors such as location, level of care and accommodation type. Health New Zealand – Te Whatu Ora sets a maximum contribution for reach region, being the highest amount a resident can be charged for standard care. Currently in Tauranga the maximum contribution is approximately $1,294.86 per week. What is a Residential Care Subsidy (“RCS”)? A RCS covers the difference between the actual cost of care and the applicant’s assessed contribution towards the care costs. The RCS is paid directly to the care facility by Health New Zealand – Te Whatu Ora. The subsidy covers the cost of standard residential care costs only, such as accommodation in a standard room, daily living assistance, nursing, prescribed subsidised medications, and routine GP visit. It is important to highlight that the subsidy does not cover premium accommodation charges for features such as private ensuites or superior views. An asset and income assessment is carried out to decide whether you are in a position to pay for yourcare yourself, and if not, your residential care subsidy entitlement. What is the asset assessment for a RCS? If you\'re 50-64 and single with no dependent children, you automatically meet the asset test. If you’re 65 or older, the asset limit for individuals or couples where you are both in care is $284,636 or less. If you’re 65 or older, and you have a partner who is not in long-term residential care you have two asset limit options: $155,873 or less, if you don\'t want to include the value of your house and car; or $284,636 or less, if you do want to include the value of your house and car. What is the income assessment for a RCS? An income assessment will be carried out to determine the applicant’s contribution towards the cost of care. For the purposes of the income assessment, income includes: NZ Super, Veteran\'s Pension or any other benefit. 50% of private superannuation payments. 50% of life insurance annuities. Overseas Government pensions. Contributions from relatives. Earnings from interest and bank accounts. Investments, business or employment. Income or payments from a trust or estate. The following is note included as income: Any money your partner has earned through work. A War Disablement Pension from New Zealand or any other Commonwealth country. Income from assets when the income is under: $1,236 a year for single people $2,472 a year for a couple when both have been assessed as needing care $3,707 a year for a couple where one partner has been assessed as needing care. Can I gift assets in advance of moving into residential care? You can gift assets to, say, family, friends, charity – but only up to a point. There are two allowable gifting limits: 1. Gifts made within the 5 year period: You are allowed to gift up to $8,000 of assets per couple per year in the last 5 years from when you apply for a RCS. This is a total of $40,000 of assets over the 5 year period with some spreading permissible during this period. If you and your partner apply for a RCS at the same time, this amount will double to $80,000. 2. Gifts made outside of the 5 year period: You are allowed to gift up to $27,000 of assets per couple per year outside of the 5 year period. It is important to note that before gift duty was abolished in 2011, the allowable gifting threshold which applied in the context of gift duty was $27,000 per person per year. This does not align with allowable gifting in the context of RCS and can often catch applicants out. Any gifting in excess of these limits will be considered as deprivation of assets. In addition, interest not charged on outstanding debts can be capitalised when assessing eligibility for a RCS as part of the financial means assessment. Will I be eligible for a RCS if I have a Trust? Whether you are eligible for a RCS when you have a Trust will depend on your gifting history. There is an expectation that trusts will voluntarily assist with long-term care costs. Where there is a closely held family trust with a history of providing for an applicant, trust income must be assumed to be available unless there are particular circumstances that demonstrate it is not. Will I get to retain any of my pension? If you are successful in applying for a RCS, a majority of your pension (or other NZ Superannuation or benefit) will be applied to their care costs. You will retain a personal allowance of $56.58 per week. In addition, you will receive an annual clothing allowance of $354.89 which is paid on 1 April in each year. Residential Care Loans What options do I have if I am unsuccessful in applying for a RCS? Where an applicant is unsuccessful in applying for the RCS, they can consider a Residential Care Loan (“RCL”). A RCL is an agreement with the Crown to provide a loan for the cost of an applicants care. To be eligible for a RCL, the applicant must own a property with an unencumbered title. A caveat will be registered against the property’s title which secures the loan. The RCL will be paid on the earlier of: The sale of the property; or Within 12 months of the date of the applicant’s death. Figures are assessed and updated annually on 1 July. These limits are accurate at June 2025.

There are several things you need to have in place in order to move into a retirement village. Residents need to have a valid Will and Enduring Powers of Attorney in relation to Property and Personal Care and Welfare. Your solicitor will need to provide the village with copies of your Enduring Powers of Attorney prior to taking occupation of the unit. Moving into a village will also involve signing an Occupation Right Agreement (ORA) with the retirement village. An ORA sets out the terms on which you can live in the village and the rights and obligations of both you and the village. You will be required to pay an entry payment on settlement, being your purchase price to live in the Unit. You will not own the unit like a freehold property, instead, you are given a right to occupy the unit and to use the village’s common areas. Below we provide information to answer commonly asked questions around ORA’s. What if my Trust is funding my entry payment? Most villages don’t allow a Trust to be recorded as the licensee under the ORA. If the entry payment is being funded by a Trust, there will need to be background documentation which records how those funds are being advanced, for example, by way of loan or by way of capital distribution. If the Trust is advancing those funds by way of loan, Trustees need to consider the DMF and any additional charges that will be deducted by the operator on termination of the ORA and how that will be treated. Most villages have a direction for payment on termination form that can be completed to record that on termination, the termination proceeds are to be paid to the Trust. What if I change my mind? Residents under every ORA have the benefit of a 15 working day cooling off period. Residents can terminate the ORA within 15 working days of signing it without having to give any reason. The DMF will not be charged where residents terminate under the cooling off period. Some villages offer a 90-day money back guarantee. This guarantee allows residents to terminate the ORA within 90 days of the commencement date, if they are unhappy with their decision to move into the village or it does not meet their needs. The DMF will not be charged where residents terminate under the 90-day money back guarantee. Residents need to meet certain criteria to cancel under this right. What is a deferred management fee (“DMF”)? A DMF is the operators charge for managing and maintaining the village, your unit and the facilities. The DMF is charged as a percentage of the entry payment up to a maximum 30%. Some villages offer a choice in DMF at either 30% or 25% with the latter option having a higher entry price. The DMF accrues over time, generally between the first 2 to 5 years of residency. The DMF is charged on termination of the ORA, and is deducted from the monies owing to the outgoing resident. What is a weekly village fee? The weekly village fee is the resident’s share of the village outgoings which are payable by the operator. Generally, the weekly village fee is charged monthly by direct debit. Weekly village fees can be fixed, or subject to change. Generally, where a weekly village fee is subject to change, it is increased by the percentage change in CPI on 1 April in each year. When the weekly village fee ceases to be payable differs between villages. Commonly, the weekly village fee ceases to be payable on the termination date of the ORA, provided the resident has vacated the unit and removed all of their possessions. Will I incur any additional ongoing costs? Separately to the weekly village fee, residents will be liable for all utility costs consumed in respect of the unit, such as electricity, gas, telephone, internet and in some cases water. Some villages purchase such utilities in bulk and build these costs into their weekly fees. Where the unit is a serviced apartment, residents will also be liable for ongoing weekly service fees for services such as meals, laundry, cleaning etc. Additional services charges for services such as hairdressing and podiatry, will be charged in addition to the regular fees. What if I need a higher level of care? Residents and their families should make enquiries as to what facilities or options are available for higher levels of care, such as serviced apartments, care suites and hospital/rest home facilities. It is important to understand what terms apply to transfers within a village, for example, will you be charged a transfer fee and if so, how is this calculated. Where a village offers care suites under an occupation right agreement, residents need to understand the DMF structure which will apply. Generally, where residents transfer from an independent living unit to a care suite, the DMF that has accrued under the independent living unit will not be applied to the care suite, and a second DMF will be charged on the care suite. Often a DMF under a care suite will accrue at a faster rate, such as 12% in the first and second year of occupancy, and 6% in the third year. Some villages charge an initial % on the commencement date. Can I terminate the agreement? You can terminate an ORA at any time on giving the required notice and the ORA will terminate on your death or the death of the survivor of you (in the case of joint residents). There are limited grounds on which the operator can terminate an ORA, such as where you can no longer live safely in the village, if you breach the terms of the ORA in a material way, if you cause any serious damage or distress to someone in the village, or you have permanently abandoned the unit. When do I receive the money owing to me following termination? Generally, residents will not receive the monies owing to them until the unit is re-licensed to a new resident, that resident has signed their ORA, the cooling off period has expired and they have settled their entry payment. Some ORA’s provide that interest will be paid on the monies owing to a resident for the period from the date that is 6 months following the termination date until the date the resident is paid. Some ORA’s provide a village contribution rebate whereby the DMF starts accruing back/gets credited back if the unit hasn’t been re-licensed within 9 months. If you are thinking of moving into a retirement home, contact Holland Beckett’s team for expert advice on ORA’s and planning for this phase of life.

When embarking on a residential building project in New Zealand, many homeowners choose to engage a Registered Master Builder. One of the key documents involved in such projects is the Master Build Contract — a standardised building contract provided by the Registered Master Builders Association, which provides access to the well-known Master Build 10-Year Guarantee. While this contract offers protections for both parties and a structured framework for the build process, obtaining independent legal advice before signing is crucial. Here\'s why: 1. Understanding the legal implications A Master Build Contract is a legally binding agreement. Legal jargon and standard clauses can sometimes obscure obligations or risks. A lawyer can clarify key clauses, such as: Payment terms and what happens in case of delays or cost overruns Liability clauses that may shift risk to the homeowner Termination provisions and how you can (or cannot) exit the contract This understanding helps you make informed decisions and avoids unpleasant surprises during the project. 2. Identifying potential risks Although the Master Build Contract aims to protect both the homeowner and the builder, it may not always cover every scenario relevant to your specific project. Legal advice can help identify risks such as: Ambiguous clauses that could be interpreted in multiple ways Inadequate provisions for project delays or cost overruns Unfavourable terms that could leave you financially exposed A lawyer may recommend amendments or additional clauses to better protect your interests. 3. Customising the contract for your project Every building project is unique, and a standard form contract may not cater to your specific needs. Legal professionals can help tailor the contract to: Reflect agreed variations to the build Include milestone-based payment terms Address site-specific issues (e.g. land covenants, access, or zoning conditions) Tie in with a contemporaneous land purchase Customisation ensures the contract aligns with the realities of your build. 4. Protecting your financial investment Building a home is often one of the largest financial investments a person will make. The Master Build Contract includes provisions around pricing, deposits, and progress payments — all of which can have major financial implications if misunderstood or mishandled. A lawyer can: Review payment terms to prevent overpayment or under-delivery Ensure retention money is handled correctly in accordance with the Construction Contracts Act 2002 Advise on guarantees and insurance coverage provided under the Master Build 10-Year Guarantee