Rest Home Costs in NZ: What to Expect and How to Plan
Rest home costs are one of the most searched — and least clearly answered — questions in New Zealand aged care. The short answer is that full residential care costs between $1,200 and $2,000 or more per week, depending on the level of care needed and the facility. The longer answer involves understanding what the government pays, what you pay, and how the Residential Care Subsidy can change the picture significantly.
This guide gives you the honest numbers and explains the funding system in plain language.
The Basic Structure: What Does a Rest Home Actually Cost?
Rest home fees in New Zealand are set by the individual facility and are not nationally standardised. However, there are government-set maximum contribution rates that determine how much a resident can be asked to pay if they are receiving the Residential Care Subsidy.
There are four levels of residential care in NZ, each with different costs:
Note: These figures are indicative. Actual fees vary between facilities and are updated periodically. Always get a current fee schedule from any facility you are considering.
What These Costs Cover
Rest home fees are all-inclusive, which is worth understanding when you're comparing the cost to alternatives. The weekly fee typically covers:
Accommodation — your room, including utilities
All meals and snacks
Personal care — help with bathing, dressing, toileting, medication management
Nursing care, at the appropriate level
Activities and social programmes
Basic consumables — continence supplies, standard medications on the pharmaceutical schedule
Laundry
What's generally not included and may be charged separately:
Hairdressing
Specialist therapies (physiotherapy, occupational therapy) beyond what's clinically funded
Non-funded medications
Private telephone and internet
Outings and additional activities
Some dental care
The Residential Care Subsidy: The Most Important Thing to Understand
The Residential Care Subsidy (RCS) is a government subsidy that pays for residential care costs for people who cannot afford to pay for themselves. For those who qualify, it is substantial — it can cover the entire cost of care above a modest personal contribution.
The subsidy is asset and income tested. Work and Income (MSD) assesses your financial situation to determine eligibility. The key thresholds change periodically, but the broad structure is:
Asset threshold
If your assets (excluding your family home in most circumstances) are below a certain threshold, you may qualify for the subsidy. As of 2025, the threshold for a single person is approximately $239,930. For a couple where one partner enters care and one remains at home, the threshold is higher and the family home is generally protected.
Assets counted include: savings, investments, a second property, certain gifts made in the previous five years. Assets generally not counted include: the family home (when a spouse, partner, or dependent is living in it), a car, and household contents.
Income contribution
Even if you receive the subsidy, you are expected to contribute most of your income towards your care costs. This includes NZ Superannuation. You retain a personal allowance — currently around $49.08 per week — for personal expenses.
What the subsidy pays
If you qualify, the subsidy pays the difference between what you are assessed to contribute and the actual cost of care, up to the government-set maximum rate for your care level. The facility receives this directly from the government.
For most people who qualify, the subsidy covers the substantial majority of care costs. It is not a small top-up — it can be the difference between meeting costs from income alone versus having to sell assets.
The Family Home: What Actually Happens
This is the question that causes most anxiety. The honest answer: it depends on your circumstances.
If a spouse or partner remains at home
The family home is not counted as an asset in the means assessment for as long as the partner remains living in it. This is an important protection — the remaining partner does not have to sell the home for the person in care to qualify for the subsidy.
If no one remains at home
If you own a home and no exempt person is living in it, the home is counted as an asset after a two-year exemption period from the date you enter residential care. This means for the first two years, the home is exempt even if empty — giving families time to make decisions.
After two years, the value of the home counts towards the asset threshold. If it takes you over the threshold, you would need to contribute more towards your care costs — potentially including drawing on the home's equity or selling it.
The rest home loan (formerly ARCL)
If the home is your main asset and you don't want to sell it, the government offers a means-tested loan — previously called the Aged Residential Care Loan — that allows you to borrow against the home to meet care costs, with repayment deferred until the home is sold. This prevents forced sales while still requiring an asset contribution over time. Eligibility conditions apply — ask Work and Income for current details.
How Costs Are Calculated in Practice
Here's a simplified example to make this concrete:
These figures are illustrative only. Actual contributions depend on individual income and asset assessments. Get a proper assessment from Work and Income before making any financial decisions.
The Means Assessment Process
To apply for the Residential Care Subsidy, you need to complete a means assessment through Work and Income (MSD). This involves providing details of all assets and income. The process:
Can be started before entering residential care — in fact, starting early is advisable
Requires documentation: bank statements, investment records, property details, income information
Results in a formal assessment of how much you are expected to contribute
Can be reviewed if circumstances change
Is handled by MSD's Residential Care team — a separate team from the main Work and Income service
The process is not as difficult as people fear, but it does require gathering financial records. It is worth starting the paperwork as soon as residential care looks likely — there can be processing delays, and the subsidy is generally not backdated to before the application date.
Getting Financial Advice
Rest home funding is one area where specialist financial advice is genuinely worth paying for. The rules around assets, the family home, gifting, and family trusts are complex — and mistakes made before a means assessment can be costly.
In particular, if you have:
Significant assets or investments
A family trust that holds assets
Made substantial gifts to family members in recent years
A business interest
Property beyond the family home
...then getting advice from a financial adviser who specialises in aged care funding — before a means assessment — is likely to be worthwhile. The rules around gifting and trusts are frequently misunderstood, and the five-year look-back on gifts means that planning needs to happen well in advance to be effective.
See our Financial Advice category page for advisers who specialise in this area.
Comparing Rest Home Costs: What to Look For
When comparing facilities, the weekly fee is only one part of the picture. Also consider:
What is and isn't included in the fee — get a detailed breakdown in writing
Whether the facility is certified at the care level your family member needs now and may need in future
The facility's most recent audit report — all certified rest homes are audited by HealthCERT, and audit reports are publicly available on the Health New Zealand website
The physical environment — room size, outdoor space, common areas
Location relative to family
The feel of the place when you visit — staff interactions, atmosphere, how residents seem
The cheapest option is not necessarily the best value, and the most expensive is not necessarily the best. The audit report and a personal visit tell you more than the fee schedule.
Rest Home Costs vs Retirement Village Costs
People often compare these two options financially, but they're structured very differently. A retirement village involves an upfront entry payment (the ORA or licence to occupy) plus ongoing weekly fees. A rest home involves weekly fees only — there's no entry payment, and the government subsidy can cover a substantial portion of those fees for people who qualify.
For people who need rest home level care, the subsidy makes residential care considerably more affordable than many families expect. For people who are still independent and simply want a community environment, a retirement village is a different proposition entirely.
See our guide Retirement Villages vs Rest Homes for a full comparison.
Annual Increases
Rest home fees increase periodically, typically once a year. Government-set subsidy rates also change annually, usually in July. If you're planning ahead, build in an assumption of annual cost increases of 3-5% per year, and check the current rates with Work and Income and with individual facilities rather than relying on figures that may be out of date.
This guide is reviewed annually to reflect current rates. If you're reading this in a subsequent year, verify the current thresholds at workandincome.govt.nz or by calling 0800 559 009.
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