What is a land lease community?

Land lease communities are rapidly gaining popularity as a downsizing option for working, semi-retired and retired people aged over 50. For Baby Boomers looking to release home equity, it’s a smart lifestyle choice that could help you achieve more financial freedom. Here’s some information you might find helpful if you’re researching whether a land lease community, like Lifestyle Communities, is a good option for you.

The basics

Under the land lease model, you buy your home and lease the land for 90 years under a Residential Site Agreement. The agreement also gives you access to the community facilities, which at Lifestyle Communities®, includes onsite community management, plus the maintenance of your front garden and all common areas.

Legislation

Your Residential Site Agreement is governed under Part 4A of the Residential Tenancies Act. This legislation regulates site agreements between site owners like Lifestyle Communities® and residents who own a ‘moveable dwelling’ but rent the underlying land. Homes at Lifestyle Communities® are considered to be moveable dwellings as they can technically be moved elsewhere.

The Resort Fee

Under a land lease model, you pay a Resort Fee to the site owner on a regular basis. Since you don’t own the land, you aren’t responsible for paying land-based costs such as council rates, water rates or body corporate. Under the agreement with Lifestyle Communities®, The Resort Fee is payable by direct debit each fortnight. The Resort Fee is reviewed on 1 July each year and any increases are capped at CPI or 3.5% - whichever is greater. For the period from March 2020 through March 2022, the total increase was an average of 1.8% annually.

Rent assistance

Centrelink refers to moveable dwellings in land lease communities as ‘relocatable homes’. If you receive the Age Pension, Centrelink should also grant you Rent Assistance payments, since you live in a relocatable home and pay a resort fee. Find out more about your eligibility through Centrelink.

Home ownership

In a land lease community, you own your own home. You can therefore make modifications to the home which may increase the value of your asset. At Lifestyle Communities®, homeowners often make modifications such as adding decking, installing different heating and cooling options and changing floor coverings. If you choose to sell your home, you can do so through a real estate agent as usual.

The Residential Site Agreement

The Residential Site Agreement is an easy to understand contract between you and the site owner which can’t be varied without mutual consent. The agreement gives you certainty about the ongoing costs plus clarity on everyone’s rights and responsibilities. Your site agreement stays in place and cannot be altered if the site ever changes ownership or management.

The Deferred Management Fee

Land lease communities often charge deferred management fees when you leave. Our Deferred Management Fee (DMF) increases by 4% each year up to the fifth year when it’s then capped at 20% of the sale price of your home. The DMF ensures that Lifestyle Communities® has an equally vested interest in maintaining the community facilities and grounds to a high standard, which helps to maintain or increases the value of your home. Across all our communities, we see consistent capital growth per annum, so we know the model is working well for all.

Land lease communities are NOT retirement villages

Land lease communities do not meet the definition of a retirement village under the Victorian Retirement Villages Act 1986, and therefore do not operate under the retirement village model. Retirement villages have different ingoing, ongoing and outgoing costs, and can offer various types of agreements. Retirement villages usually charge a DMF of 30-40% of the sale price, and often have step-in rights to make you refurbish your home at your expense when you sell.

Land lease communities offer an affordable housing option for people looking to downsize. Open to working, semi-retired and retired people aged over 50, Lifestyle Communities® is a high-quality community, home to over 5000 people, operating under the land lease model. If you’d like to explore living at Lifestyle Communities®, contact us on 1300 50 55 60.