Imagine being able to downsize into a new home for well under the full purchase price, allowing you to put away up to $150,000 into your retirement savings?
This, in a nutshell, is how buyers are using the unique shared equity home purchase solution being offered by national over 50s lifestyle community operator Hampshire.
The Hampshire Property Group is a family owned Australian company with 20 years’ experience in the retirement living industry.
Its 17 communities are located in desirable coastal, regional and outer metropolitan areas across New South Wales, Victoria, South Australia and Western Australia.
Hampshire has been offering its shared equity solution for the past 12 years.
It allows incoming residents to purchase a new home for as little as 65 per cent of the set purchase price.
Downsizing.com.au has spoken to a number of Hampshire community residents, and the company itself, to better understand the shared equity offer.
Residents who’ve used shared equity
In June 2020, Jim and Lorraine Mountford purchased a new two bedroom home at Hampshire’s Rest Point community at Nowra on the NSW South Coast.
However, instead of paying the full $360,000 purchase price, the Mountfords were able to take advantage of Hampshire’s shared equity offer and instead pay $252,000.
This means the Mountfords own 70 per cent of the dwelling, with Hampshire retaining ownership of the remaining 30 per cent.
Despite this proportional ownership, the Mountfords are able to enjoy all of Rest Point’s facilities and activities, including its swimming pool and community centre, just like residents who’ve paid full price.
Mr Mountford told Downsizing.com.au that his wife and himself had moved from Dapto, in Wollongong’s southern suburbs.
“We had a lovely four bedroom house, but it was too big for us and still had a mortgage on it,” Mr Mountford said.
“We chose to retire to Rest Point, as it’s still close enough for the rest of our family to easily visit, but it’s also near hospitals and shopping and only 15 minutes from South Coast beaches.
“We were very happy with the house we ended up buying at Rest Point.
“However, if we’d paid the full purchase price, we would have also had to sell our last investment property, which provides an important rental return for us.
“So by using the shared equity offer, we were able to move into the community and home we wanted, but still hold on to our investment property.”
Meanwhile, fellow Rest Point resident Maria Zdjelar has used the shared equity home purchase solution on several occasions to help her with everyday living expenses.
Ms Zdjelar first moved into Rest Point a decade ago. Since then, she’s moved home three times, each time making a shared equity purchase.
By moving into smaller homes and by using the shared equity solution, Ms Zdjelar has been able to unlock retirement funds and also continue to live in the community, which she positively likens to being on a “permanent holiday”.
Shared equity an affordable housing solution
Hampshire Property Group CEO Frank Sharkey said the shared equity solution was an important tool which helped people to achieve their retirement dreams.
“We often find potential buyers have been holidaying for many years in the areas where our communities are located, and they like the area and want to retire there,” Mr Sharkey said.
“However, they’ve been unable to afford the full purchase price to move into a new home in one of our communities. This is particularly the case for people who’ve lived for many years in regional areas, where home prices are lower than in capital cities.
“Shared equity provides a real affordable housing solution to these buyers.
“In addition, we also find buyers who want to use shared equity to free up their retirement savings, so they can do things on their bucket list such as buy caravans and go on holidays, or to help children and grandchildren.”
Mr Sharkey said new homes in Hampshire’s communities were generally worth between $280-380,000, although could reach up to $500,000. This means using shared equity can deliver a saving of up to $150,000.
Importantly, Mr Sharkey said Hampshire didn’t offer “two-tiered pricing” - in other words the full price of dwellings was static and wasn’t influenced by whether it was purchased in full or via the shared equity pathway.
Details about the scheme
There are some terms and conditions which apply to shared equity offers.
For instance, an opportunity fee applies to shared equity purchases. This fee is linked to the value of the home and the length of the stay, and is charged to compensate Hampshire for not receiving the full purchase price.
In addition, the shared equity offer is primarily available for newly-built homes and owners are required to maintain, repair and insure the whole of the home. Please enquire with Hampshire at this web page to learn about other conditions.
Mr Sharkey says that, after weighing up all the options, around one in five buyers take up the shared equity solution.
Importantly, these buyers reap many of the other financial benefits of land lease living, including owning a dwelling but at the same time being able to avoid stamp duty and council rates and being able to claim government rent assistance (subject to eligibility).
Hampshire is the only national land lease community operator currently offering a shared equity solution.