LAND LEASE COMMUNITIES vs TRADITIONAL RETIREMENT VILLAGES

Land lease communities and traditional retirement villages have many similarities – both are designed primarily for retirees who live independently and are seeking the security, friendly social environment and facilities of an age appropriate community.

WHAT THEY OFFER

WHAT THEY OFFER LAND LEASE COMMUNITY TRADITIONAL RETIREMENT VILLAGES
Provision of a private secure and friendly community environment for retirees. Yes
A land lease community is a managed community.
The law about land lease communities is regulated by the NSW Fair Trading under the Residential (Land Lease) Communities Act 2013.
Yes
A retirement community is a managed community for retirees. Retirement villages are regulated by NSW Fair Trading under the NSW Retirement Villages Act 1999.
Restricted to seniors aged 50+ Most are
Land lease communities can have working, semi-retired and retired residents – most attract residents aged 50 +. Some land lease communities have residents of all ages. Those directed at the retiree market have age restrictions with rules limiting entry to for example Over 50s or 55s.
Yes
Retirement villages are primarily for those aged 55+ or who have retired from full-time employment.
Gardens and recreational amenities Yes
Many land lease communities are located within landscaped grounds with resort style amenities such as club houses, swimming pools, bowling greens and tennis courts
Yes
Many traditional and modern retirement villages offer resort style recreational amenities and landscaped gardens.
Security Yes
Some land lease communities are gated, with a boom gate and onsite and after-hours security and assistance.
Yes
Traditional and modern retirement villages offer onsite management during business hours and on-call access to after-hours security and assistance.
Exclusively for permanent residents Yes
Generally, sites are exclusively for permanent residents. However, some can accommodate both permanent residents and short-term holidaymakers.
Yes
Retirement villages are exclusively for permanent residents.
Maintenance
of Common Areas
Yes
Maintenance of all common areas and facilities is the responsibility of the community operator.
Yes
Maintenance of all common areas is generally the responsibility of the village operator.
In the case of strata retirement villages, the Owners Corporation is responsible.
Home Maintenance No
Maintenance of the home on the site is the responsibility of the homeowner.
Under the site agreement home- owners have to maintain their homes in good order, consistent with the standards of housing in the community.
Yes
In most retirement villages maintenance of homes is the responsibility of the village operator.
In strata villages maintenance of the home is the responsibility of the unit owner.
Onsite Management Yes
Most land lease communities have onsite management offices and personnel whose role is to coordinate maintenance, administration and community activities.
Yes
Most retirement villages have onsite management offices and personnel whose roles to coordinate maintenance, administration and community activities.
Additional Services Yes
Land lease communities are suitable for people who can live independently, however, as people age the community manager can assist them to coordinate additional home care services such as cleaning, home maintenance and meal assistance. These are usually external services that are paid separately by the homeowner.
Yes
Retirement villages are for those who can live independently but the community manager can assist them to coordinate additional home care services such as cleaning, home maintenance and meal assistance on a pay-as-you-go basis.
Security of Tenure Yes
The community operator cannot terminate a residential site agreement without specific grounds; these are clearly set out under the Act and are usually also specified in site agreements.
In some limited instances– such as sale or redevelopment of the land, operators can terminate site agreements. However if they initiate such action for these reasons they will have to pay compensation to home owners to assist them in moving.
Yes
Generally, the only circumstances that allow for removal of a resident revolve around a breach of the terms of the contract/license or village rules and by-laws.
However, some contracts allow for a change in retirement village ownership, which can trigger a right to buy back units from residents.

HOW THEY DIFFER

The main differences between residential land lease communities and retirement villages are the type of contractual arrangements that are in place, their level of affordability and the legislation governing their operation.
  • Home owners in residential land lease communities sign a site agreement with the park operator and pay an average site rental fee of between $120-$300 per week. Pensioners are able to offset part of this cost through the Commonwealth Government’s Rental Assistance scheme. To find out if you are eligible for rental assistance and the level of rebate you can claim click hereYou also purchase a manufactured home – either new or ‘pre-loved’. The average purchase price for a manufactured home within a land lease community ranges between $100,000 – to more than $300,000 (home costs vary according to the size and age of the home). When a home owner chooses to leave the community they generally just sell the home to another incoming purchaser.
  • Residents of Retirement Villages have several different contractual models the most common of which are loan/licence or loan/lease agreements. With these complex agreements, residents pay an entry fee or ‘incoming contribution’, which can range between $300,000 – $1 million+. The incoming contribution purchases either a long-term lease or a licence, which gives incoming residents a ‘right to occupy’ a unit or villa within the village.Residents also pay service and maintenance charges which can average between $100- $200 per week depending on the size of the village and the facilities and services that are offered. Although aged pensioners may be eligible for Commonwealth Government Rental Assistance, this only applies if the price paid to enter the village is below $151,500 (as at August 2016).When the resident leaves the village their original inbound payment is refunded – less applicable exit fees (also known as a Deferred Management Fee); on average the exit fees are charged at around 35 per cent of the original entry price.As an example, if a resident pays $350,000 to enter a retirement village when they leave they are refunded their original contribution less a 35 per cent exit fee of $122,500.There are also strata retirement villages where residents purchase the freehold to a unit or villa within the village. In these instances residents become a member of an owners corporation and pay fees. When they leave they sell their unit or villa on the open market.

Type of Contracts – Land Lease Community vs. Retirement Village

Type of Community Type of Tenure
Land Lease Community
(Leasehold)
Contract:
Site Agreement
Leasehold – a long-term lease for the land on which your home is located.
Retirement Village
Contract:
Loan/ Licence or Loan/Lease
Agreement
Residents purchase a right to occupy a unit or villa within a retirement village.
Retirement Village
(Strata Title)
Contract:
Freehold Strata Title to a ‘lot’ which includes the residence plus ownership of common property within the village
Residents buy a strata title to a unit or villa within a retirement village and as members of the owners corporation jointly own common areas and are responsible for their maintenance and upkeep.

COMPARE COSTS

Land lease communities are generally more affordable than retirement villages – largely because of the level of entry and exit fees that are payable. The chart below highlights the main cost differences.

Cost Comparisons – Land Lease Communities vs. Retirement Communities

Type of Community Financial Outlay – Estimated Average Costs/Payments*
Land Lease Community
  • Manufactured House purchase price
  • Weekly site rental fees
  • Pensioners can claim Commonwealth Government Rent Assistance to help offset site rental fees.
  • Stamp Duty
  • Council Rates
  • Exit Fees
$100,000-$300,000
Depends on size, style, new or ‘pre-loved’
$100-$200pw
Depends on lot size & location
Different rates of rent assistance apply for couples, singles or those sharing a house e.g. couples can currently claim a maximum of $122.80 per fortnight.Not charged on Land Lease site agreements and housing purchases
Not charged to residents of Land Lease communities
Not usually charged
Retirement Village
Loan/Lease or Loan/Licence
  • Upfront entry payment – prices can reflect local real estate values.
  • Weekly service charges
  • Pensioners can claim Commonwealth Government Rent Assistance
  • Stamp Duty
  • Council Rates
  • Exit Fees
$300,000 –$1 Million +
Depends on size, location, amenity and age of village.
$100-$200pw
– charges vary between standards of villages and their level of amenity.
Yes – but only if the ingoing contribution is less than $151,500
No stamp duty paid on loan /licence or loan/ lease agreements
Not charged to residents of these type of Retirement Villages
Yes. A range of fees including a Deferred Management Fee and refurbishment costs. On average fees are calculated at around 35% of original ingoing contribution.
Retirement Village

Strata Title

  • Payment of purchase price for the property – can reflect local real estate values.
  • Quarterly Body Corporate Fees
  • Stamp Duty
  • Council Rates
  • Exit Fees
$300,000 –$1Million+
Depends on size, location amenity and age of village
$1500+ depends on amenities & maintenance requirements
Yes. Payable on sale price of unit
Yes. Payable by resident
Yes. Payable as either a percentage of the entry price or as a percentage of the re-sale price of the unit or villa (e.g. up to 50% of capital gain).

(Figures are estimates based as at August 2016)

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