Occupation Right Agreements Explained

When you move into a retirement village, you don't buy the villa the way you'd buy a house. Instead, you sign an Occupation Right Agreement, usually shortened to ORA, which gives you the right to live in your villa for as long as you choose. It's a different legal arrangement to home ownership, and it's worth understanding exactly what it does and doesn't give you before you sign anything.

What you own, and what you don't

Under an ORA, you don't own the land your villa sits on, and you don't hold the title the way you would with a house. What you have is the right to occupy the villa, use the village facilities, and live there for as long as you want to stay. The village itself retains ownership of the land and the building.

What happens when you leave

When a resident moves on, the ORA sets out what happens next. The village finds a new resident for the villa, and the amount originally paid is returned, minus the Deferred Management Fee and any agreed refurbishment costs.

Two things are worth understanding here, and they work in opposite directions.

If the villa has increased in value since it was first occupied, that increase stays with the village rather than going to the outgoing resident or their estate. This is standard across most retirement villages in New Zealand, and it's part of what keeps entry prices lower than buying on the open market.

If the villa sells for less than you paid, you don't carry that loss. At Longridge, your capital is protected if we sell your villa for less than you paid for it.

People usually hear the first point and not the second. Both belong in the picture.

Getting independent legal advice

Contracts like this can be confusing, and it's a common feeling rather than a personal one. Village Guide research found that 47% of prospective residents say retirement village contracts can feel confusing.

In New Zealand, independent legal advice before signing an ORA isn't optional, it's a legal requirement under the Retirement Villages Act. We build time into the process for it, so your own lawyer can go through the agreement with you properly and you can ask whatever you need to before anything is signed.

Longridge's terms, in summary

At Longridge, your entry payment is a $5,000 deposit, held in trust rather than by Longridge. If you decide not to go ahead, the deposit is returned to you. The balance is paid on settlement day when you move in.

The Deferred Management Fee is 7.5% for each year you live in the villa, up to a maximum of 30% after four years. Once it reaches 30%, it doesn't grow any further, however long you stay.

There are no refurbishment costs unless damage goes beyond normal wear and tear.

Where to go next

For a full breakdown of the fees involved, see our affordable living guide. If you're weighing up more than one village, our guide to comparing retirement villages sets out the questions worth asking each of them.

Questions about how this works? Call 0800 928 928 or book a visit.