New NZ retirement village follows Australia’s lead on capital gains

A new retirement village in New Zealand is following the lead of Australian villages by giving the residents a share of the capital gains when their units are sold. Vivid Living at Red Beach, on Auckland’s North Shore, is located within owner Fletcher Building’s larger Red Beach planned community. The village is charging a 15% Deferred Management Fee – compared to the more typical 20%-30% in NZ, and 30-35% in Australia – and is offering residents a 50% capital gains split. Steve Evans (pictured), Chief Executive Residential and Development at Fletcher Building, says he believes the model will prove popular with residents aged 70 and over.

“When we first started thinking about establishing a retirement business, we identified a gap in the market – where people wanted to downsize but didn’t necessarily need or want all the bells and whistles of a traditional retirement village. “We believe Vivid Living helps plug this gap by integrating the villas into the surrounding Fletcher Living neighbourhood where everything is on the doorstep, and secondly delivering a fairer financial structure,” he said.

According to Steve, the model follows recommendations from the Commission for Financial Capability’s White Paper released last year.

“This includes the buyback of the villa within 4 months, no weekly fees after exit, and ORA (Occupational Rights Agreement) exit provisions, where we will payback 10% of the Residence Advance within five days of an ORA ending. “We appreciate people work long and hard to build up their nest egg and want to make smart financial choices in their retirement years. Our financial model throws something different into the market for them to consider,” he said.