Over-50s and land lease communities explained

Over-50s lifestyle communities have become a popular option for people looking to downsize. Many are land lease communities, sometimes called manufactured home estates, residential parks or lifestyle resorts. They often offer new, low-maintenance homes and resort-style facilities, and they're commonly promoted as having no stamp duty or exit fees.

The key difference from buying an ordinary house is that you generally own the home but not the land. You pay the operator a regular site fee to lease the land. This guide explains how that works, the costs and protections, and how land lease communities compare with retirement villages and the general housing market. It is general information only, so always get independent legal and financial advice.

How land lease communities work

When you buy into a land lease community, you usually:

1. Buy the home, either a new home from the operator or an existing home from a departing resident.
2. Sign a site agreement with the operator, giving you the right to occupy the site the home sits on.
3. Pay a site fee, often weekly or fortnightly, which covers the land lease and use of the community facilities.

Because you don't buy the land, the purchase price can be lower than a comparable house on its own land, and in some cases stamp duty doesn't apply. But you pay site fees for as long as you live there, and the value of the home depends partly on the site agreement and the community.

Which laws apply?

Land lease communities are generally covered by specific state laws, not retirement villages legislation. Examples include:

• New South Wales: the Residential (Land Lease) Communities Act 2013, administered by NSW Fair Trading.
• Queensland: the Manufactured Homes (Residential Parks) Act 2003.
• Victoria: residential parks and site agreements are covered under residential tenancies law, with information from Consumer Affairs Victoria.
• Other states and territories have their own residential parks or caravan parks legislation.

These laws typically deal with site agreements, disclosure, site fee increases, selling your home, community rules and disputes.

The costs to understand

Purchase price

You pay for the home itself. New homes are usually sold by the operator. Resale homes may be sold by the owner, an agent or the operator, depending on the site agreement and state law.

Site fees

Site fees are a major ongoing cost. Ask:

• How much is the site fee now, and what does it cover?
• How is it reviewed, and how often? Is it linked to an index such as CPI, a fixed percentage, or a market review?
• What other charges apply, such as utilities?

Over many years, site fee increases can add up. Compare the total cost over the time you expect to stay.

Exit costs

Many communities advertise "no exit fees", but check the site agreement. Some include deferred management fees, selling commissions or other charges when you leave. Some operators have the right to act as selling agent.

Rights and protections

State laws generally provide:

• Disclosure before you sign, including site fees and rules.
• Limits on site fee increases, and processes to challenge excessive increases.
• Rules about selling your home on site, including your right to sell and the operator's role.
• Community rules and how they can be changed.
• Termination rights and protections.
• Dispute resolution through the regulator and tribunal.

Comparing land lease communities and retirement villages

Neither option is better for everyone. The right choice depends on your budget, your plans and the specific contract.

Pension and tax considerations

How you hold your home affects how it's treated for pension and other payments. In some cases, people who pay site fees may be eligible for Commonwealth Rent Assistance. Ask Services Australia or a financial adviser how your choice would affect your situation.

Questions to ask

• What exactly will I own, and what will I lease?
• What is the site fee, and how can it increase?
• Are there any exit fees, commissions or deferred charges?
• Who can sell my home when I leave, and on what terms?
• What happens if the community is sold or redeveloped?
• What facilities are included, and could they change?

Common mistakes

• Assuming "no exit fees" means no costs when leaving.
• Underestimating long-term site fee increases.
• Not checking who can sell the home.

Visiting a community

When you visit, look beyond the display home. Walk around the community, look at older homes as well as new ones, and visit the facilities at different times of day. Talk to residents about site fee increases, how the operator responds to problems, and how easy it has been for people to sell their homes. Ask how many homes are for sale and how long they've been on the market. Check the distance to shops, medical services and public transport, especially if you might stop driving in future.

Where to find more information

Your state fair trading or consumer protection agency publishes guides to land lease communities or residential parks, including information on site agreements, site fee increases and selling a home on site. Moneysmart explains housing options for retirees in general terms, and Services Australia can tell you whether you may be eligible for Rent Assistance. A lawyer can review a site agreement before you sign and explain any unusual terms.

If the community is sold

Land lease communities can be bought and sold by operators. Ask what protections apply under your state's law if the community changes hands, and whether your site agreement stays the same.

Key points

In land lease communities you usually own your home and lease the land, paying site fees. They're governed by separate state laws, not retirement villages laws. Check site fee increases, exit and selling terms, and community rules, compare total costs with other options, and get independent legal and financial advice.