Elderly New Zealanders could be asked to hand over lump sums of more than 650,000 dollars to secure a place in a rest home under an accommodation bond model now being floated as a possible answer to the deepening crisis in residential aged care. The proposal, put forward by Grant Thornton ahead of Budget 2026, would let older people who sell the family home pay roughly 65 percent of the median local house price as a refundable deposit, with most of that money returned at the end of their stay.
Pam Newlove, who leads Grant Thornton’s retirement village, aged care and healthcare services practice, told RNZ the bond would be paid back in full minus an annual deduction set at two percent of the lump sum for each year of residence, capped at ten percent after five years. On her numbers an Aucklander who paid in 650,000 dollars and stayed five years would walk away, or have their estate paid out, with 585,000 dollars. A Christchurch resident putting in 455,000 dollars and staying three years would receive back close to 428,000 dollars.
Ms Newlove argued the bond would unlock a pool of patient capital the sector has been unable to raise through banks. Aged care operators in New Zealand have largely stopped building because returns are too thin to justify the borrowing, and several providers have closed homes outright. Bond money sitting in trust would, she said, give operators a low-cost way to fund new beds without driving up day rates for residents.
She pointed across the Tasman to Australia, where accommodation bonds, now called refundable accommodation deposits, have run alongside government subsidies for years and are credited with helping that sector keep building. New Zealand by contrast funds aged residential care almost entirely through Health New Zealand contracts and a daily surcharge of up to 85 dollars on top of the subsidy, a structure providers say no longer covers the real cost of running a home.
The figures behind the warnings are stark. Public hospital care costs the taxpayer around 1,700 dollars a day. Residential aged care, by comparison, sits closer to 370 dollars a day, and yet the sector is shedding beds rather than adding them. Aged Care Association chief executive Tracey Martin has spent the past year warning that without a funding overhaul the country will lose more homes, and that families in regional New Zealand will be the first to feel it.
The West Coast has already lost 54 aged residential care beds over the past decade after Health New Zealand pulled back from running services in Reefton and Westport. The Buller District has one of the oldest populations in the country, with 26.3 percent of residents aged over 65, nearly double the national average, and yet there is now nowhere local for many of those people to go when home care is no longer safe. The closure of Enliven’s Reevedon Rest Home in Levin earlier this year drew the same warning from Ms Martin, who said Reevedon was unlikely to be the last home to shut its doors unless the funding model was rebuilt.
The bond idea is not without complications. The proposal would require legislation to ring-fence the money so it could not be lost if an operator failed, similar to the protections that sit around retirement village occupation rights. Means assessments would still apply, so older people without the assets to pay a bond would continue to be supported through the residential care subsidy administered by Work and Income. Grant Thornton has been careful to frame the model as one option that could sit alongside the current daily accommodation charge rather than replace it, giving incoming residents a choice between paying a lump sum upfront or a higher running rate.
Critics will point out that 650,000 dollars is a sum most older Aucklanders only see once, when they sell the home they raised a family in, and that locking it up in an aged care facility is a very different proposition from leaving it to children or grandchildren. Others will note that bonds shift the political risk of underfunding from the Crown onto households, and that the underlying problem, that the government pays operators less than it costs to deliver care, would not disappear.
Even so, the conversation has moved on quickly. A ministerial advisory group set up last year has been working through funding and service-model options, and aged care providers are now openly lobbying for a settled answer before more homes close. Whether Finance Minister Nicola Willis uses Budget 2026 to signal a new direction, or whether the sector is told to wait yet again, will shape what happens to thousands of older New Zealanders over the next decade.
What do you think, would you put 650,000 dollars into an aged care bond to lock in a bed for a parent or partner, or does the idea of handing over the proceeds of a lifetime’s home ownership feel like a step too far? Let us know in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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