Many Over 50s consider Land Lease communities as a viable option when looking for living alternatives in their mature years. We take a look at the main benefits of Land Lease arrangements.
Landlease communities in NSW are governed by the Residential (Land Lease) Communities Act 2013. If you buy into a Landlease community, you own the home but lease the land on which the home sits from the community operator. There are several advantages in this in comparison to retirement villages and the more traditional outright purchase of both the land and the building. The two main advantages being cost and the future ability to sell.
Kevin Tucker, Director of Hometown Australia Communities, that has Landlease properties in Port Macquarie and Port Stephens, explains there are investment savings both at the beginning and end of a Landlease contract, “Homeowners purchase their home and enter into a secure site agreement for the land. This means their initial investment is affordable and there is no stamp duty on the purchase.”
When it comes time to move on, “There are no exit fees and the homeowner or their families will retain all capital gains from the eventual resale of their property. The Land Lease model gives more flexibility than many other types of retirement living.”
In respect of capital gains, it is important to keep in mind that homeowners would be able to make the most of it if the structure is well maintained or even renovated to keep up with the market in order to retain value over time because any capital gain would only be from the house as the land is not being sold.
On an ongoing basis, land lease rentals are payable to the operator with Landlease arrangements. This will impact the overall savings, although some homeowners may be entitled to an element of government assistance.
Nonetheless, the factors that Kevin has outlined can result in significant savings both in the short and longer terms. This is important when you consider that many Over 50s are looking at accommodation alternatives as part of a downsizing strategy. The idea being to free up as much capital as possible that they may be tied up in a large family home and still have a good place to live in. However, this age group is not looking to ‘downgrade’ in any way just because they ‘downsize’ and they want top-quality design features that are specifically catering for the over 50 age group both now and as their needs change in the future.
The lower cost of Landlease arrangements compared to buying both the land and the building means that people can afford to live in prime locations such as in waterfront communities or prime urban communities with easy access to many of the city facilities they would have become used to whilst in the family home. The financial model also allows homeowners to better afford more upmarket designs and amenities within a resort-style community.
Kevin confirms this in describing HAC’s new Port Stephens development, “We are about to begin construction of our brand new Sunrise Lifestyle Resort in Port Stephens and are spending a great deal of time on designing the home and community amenities to offer the latest in sustainable and eco-friendly living. With single level, mobility friendly home designs, luxury, comprehensive and accessible community facilities that house a myriad of facilities including; Gym and separate exercise areas for yoga & fitness classes, theatre/ media room, indoor and outdoor pools, tennis court, lawn bowls (and much more) and for our travellers… large scale caravan and RV storage this will be true Resort Lifestyle Living.”
How about the intangibles that people look for in their mature years? Many homeowners say that one of the true benefits of living in a resort community is the sense of “community” and the easy proximity of like-minded people. According to Kevin, this sense of community is something that an operator and homeowners build together.
“We encourage our homeowners to become actively involved in the Community, though we also stress that it is up to the individual and residents are free to join in as much or as little as they want. For instance, at Newport Village, the managers organise and host a monthly BBQ where everyone is invited. These social gatherings are well attended and enjoyed by our homeowners. It also gives our new homeowners an easy way to meet people. We supply the canvas and tools for our homeowners to build their dream.”
Whilst we have described some of the benefits of the Landlease model, it is also very important to keep in mind that these communities seldom provide some of the support services that other alternatives such as retirement villages may have; so it not entirely a like-for-like comparison. In the main, the services seldom available in Landlease communities are related to medical and allied services.
It would also be fanciful to believe that everything goes according to plan and expectations 100 per cent of the time. We asked Kevin what kinds of processes should be in place for handling issues that homeowners may not be happy with.
As we have onsite managers, homeowners can always speak to someone about a problem. We encourage our homeowners to have a Resident’s Committee which can present and discuss any issues with management. We also arrange guest speakers from resident advocacy groups to come along to our communities and speak openly with our homeowners, discuss their rights and any concerns they may have.”
Landlease communities are definitely an alternative that can supply luxury living in a safe and secure community environment. Depending upon the individual’s needs and expectations, Landlease can also be more affordable allowing homeowners more freedom in their life choices now and in the future.