Australia’s land lease community industry is booming, due to the rising number of over 50s who are deciding it is their preferred retirement living model.
Given this, Downsizing.com.au has decided to give our readers some tips to help them find the perfect land lease community.
About land lease communities
Land lease communities are also known as lifestyle communities, residential parks or manufactured home estates. In these communities, purchasers buy a dwelling and then rent the land on which the dwelling is located.
The land lease community industry originally grew out of the concept of permanent residents in caravan parks, but has since flourished into purpose-built over 50s resort-like estates with new dwellings which look more like new display homes than pre-fabricated cottages.
These communities are typically located on flat land on the edge of major cities or in attractive regional locations, and contain communal facilities such as swimming pools, tennis courts and clubhouses.
They generally attract younger, more active, retirees (for instance one Victorian land lease developer says its average resident age is 73 which is well under the nationwide retirement village average age of 81).
Each State and Territory has its own regulatory framework for these communities.
The price of dwellings can vary widely, depending on their condition and the location and state of the surrounding village.
A study from PRD Nationwide released earlier this year found that land lease community home prices in South East Queensland ranged from $110,000 right through to more than $1 million.
There are significant tax advantages to land lease living, which is helping drive a nationwide boom in new communities.
Firstly, because of the rental arrangement, purchasers don’t have to pay stamp duty on the new home. This helps avoid tens of thousands of dollars in State Government stamp duty costs. For instance, buying a median priced house in NSW’s Port Macquarie would cost you $20,632 in stamp duty, but buying a land lease dwelling in the same town would not cost you a cent in stamp duty.
Secondly, purchasers can be eligible for Commonwealth Rental Assistance, and in doing so claim up to $130 a fortnight from the government.
Questions to ask
Each State and Territory has different disclosure requirements, with potential purchasers given a set of documents with information about the community.
Irrespective of this information, it still pays to be nosey and ask a lot of questions, including the questions below:
What are the community rules?
Each community will have its own set of rules. It pays to closely read these rules, before deciding to purchase a dwelling in the community.
For instance, make sure you don’t get bitten by rules about pets, which could leave your beloved Rover or Sootie on the outer.
The NSW Government-supplied model community rules (which may or may not be adopted by individual operators) state that all pets in a land lease community must be desexed and dogs must be kept on a leash on common areas.
In addition, the rules state that cats must be kept inside after dark and must wear a collar and bell at all times.
There are also rules about cleaning up after your pet, and ensuring your pet does not cause a nuisance through excessive barking.
If these rules are not followed, you could be forced to remove the animal.
The rules on visitors also needs to be understood. Usually, you will be required to notify the community operator before allowing people to stay overnight in your dwelling.
It is possible, as well, that there are community rules about how long visitors can stay, how many can stay at any one time, and even their minimum age.
Additionally, you will need to understand whether you will be allowed to sub-let your dwelling, for periods when you may not occupy it or if you are considering bringing in a boarder to help with costs.
What is the approach to fees and charges?
You need to understand the operator’s approach to fees and charges.
Typically, you will pay a weekly site fee, plus also need to pay other charges (which will probably include electricity, gas and water costs).
In NSW, the operator can either increase site fees by a fixed amount each year (for instance in line with the consumer price index) or by giving notice to residents (which requires 60 days’ warning to residents).
It is well worth asking, before you move in, whether there have been a number of site fee increases in recent years, and how the operator intends to adjust fees going into the future. This could help you predict possible future increases.
With utilities, it is helpful to understand whether individual electricity, gas or water meters are supplied to dwellings.
In the case of electricity, it is also good to know whether these individual meters are smart meters (which calculate peak and off-peak power and therefore allow you plan your day to reduce costs).
Individual meters means you will be paying for your own personal usage, rather than costs being calculated simply by averaging total community costs against the number of dwellings on-site. The latter approach means you could be subsidising someone else’s excessive usage.
In addition, it is worth checking whether you have the ability to choose your own electricity retailer, or whether you have to use the community’s embedded supplier.
With the water costs, it is important to understand how these are calculated - for instance is there a stormwater levy along with upfront and user-pays sewerage and fresh water supply costs.
In addition, it is worth understanding the operator’s approach to telephone line costs, along with the availability or costs involved in pay television or wi-fi connections.
What are the rules in relation to my dwelling?
It is well worth understanding your rights and obligations in relation to your dwelling.
For instance, will you be allowed to make modifications to your home, such as handrails or ramps, if you need them? Do you need to seek approval if you upgrade your bedroom or kitchen? Are there rules about garden areas around the dwelling?
Are you allowed to display a sign outside the dwelling, indicating you are occupying it? As a proud Aussie, can you fly the Australian flag?
In addition, does the operator expect you to maintain your dwelling to a minimum standard, such as through regularly painting or washing it?
In NSW, operators are not allowed to require a resident to do something to their dwelling, unless this relates to a “health or safety” issue.
Is it possible the park site could be redeveloped?
Irrespective of the long-term leases which are often offered at land lease communities, the relevant State or Territory legislation typically allows the operator to seek approval from a tribunal to terminate a site agreement if a development consent has been obtained to redevelop the land.
This would mean you may need to move your dwelling to another site - typically the operator needs to assist with this process and pay compensation, and there is a long lead-in time before you need to move.
It is a rare event, but not beyond the realms of possibility.
Redevelopment of a land lease community is most likely when the community is a historic one that has been rezoned to allow a more intensive land-use, such as townhouses or residential flat buildings, in an attractive area. For this reason, it is well-worth checking the relevant local planning maps which apply to the site.
In addition, it is worth asking the operator whether it is currently pursuing a rezoning or development application to redevelop the land.
Are there ways to reduce my site fees?
Some land lease operators may be willing to consider options to reduce ongoing site fees, which could include paying a deferred management fee when you move out of the park, or agreeing to give up a share of your dwelling’s capital gains.
Separately, some operators may offer you a discount on the incoming purchase price, as long as you pay a fee when you leave the community.
For instance, Hampshire Villages offers a shared equity solution, where you may be allowed to purchase as little as 65% of the cost of the dwelling.
In saying this, many operators also are very clear that they don’t require deferred management fees, to differentiate themselves from the retirement village industry.
What care services are available?
It is well worth understanding whether the operator has any arrangements in place with surrounding medical centres or health providers, to allow you to more easily access care services.
For instance, major land lease community operator Ingenia offers a free care coordination and advocacy service called Ingenia Care.
“Our Ingenia Care service enables residents to receive timely care without having to go through the frustration of trying to find the services themselves,” said Ingenia General Manager Care Development Janene Eagleton.
Downsizing.com.au has Australia's most extensive range of land lease communities. Use our suburb search facility to find a community in your preferred location.
For more information on regulatory issues, the following links coud be helpful: