A growing demographic of active over 50s in Australia looking to maximise lifestyle and financial future are taking a closer look at land lease communities.
They plan to release the equity in the family home to purchase a new, luxurious ‘rightsized’ home in a secure, holiday resort-style community while avoiding the entry and exit fees that come with retirement villages.
In this article, we take a deep dive into land lease communities and how they work, including what makes them different than traditional retirement offerings – particularly with respect to financial structures and fees.
What is a Land Lease Community?
Quite simply, a Land Lease Community (LLC) means that you own your home and simply lease the land that it is on. Your right to occupy that site is guaranteed by state government legislation.
This easy-to-understand real estate model is increasing in popularity with people over 50 who are looking to downsize because it has appreciable financial benefits in the short and long term.
Choosing the right land lease community also provides the opportunity to enjoy a resort lifestyle in a friendly and active community, along with the peace of mind that your home is secure when you decide to go travelling.
At GemLife, we operate exclusively under a Land Lease model, ensuring our residents can enjoy the best that life can offer. Land Lease Communities provide our residents with the luxury of resort living, without breaking the bank. Let’s take a closer look:
You Own Your Home, Not the Land
One of the reasons why land lease communities are popular is the security of owning a luxurious new home at a price that is much less than buying a house and the land.
That means your home features a higher level of luxury inclusions as standard as well as access to premium resort facilities.
Also, you own the home outright, unlike some retirement village structures which may only offer a leasehold agreement.
Purchasing in a land lease community means there is no stamp duty to pay on the purchase of the home because you are not paying for the land – and that can save you thousands of dollars at the outset.
Before signing a contract on a land lease community home, it is important to do your homework. The number and type of inclusions can vary from company to company, so it is important to understand what comes as standard and what are paid-for extras to ensure you get value for money.
For more information on GemLife’s home inclusions, check out our resort locations.
Site Management Fees
Modest weekly site management fees in LLCs make it easy to budget for retirement expenses.
The site management fee covers the cost of council rates, maintenance of the resort gardens and facilities, as well as the onsite resort management. The weekly fee is adjusted for CPI annually.
Rent Assistance
Homeowners in land lease communities who hold an Australian pension, or a Department of Veterans’ Affairs card, may also be eligible for rental assistance, which further reduces the cost of the weekly site fee.
Some Residents are Eligible for Rent Assistance
Under the unique land lease community model, eligible Australian pension and Department of Veterans’ Affairs card holders may be eligible for government rental assistance to further reduce the cost of the weekly site rental.
Reduced Operating Costs
Land lease community homes built to the current 6-star and the upcoming 7-star energy rating, means heating and cooling bills are generally much less than the standard family home.
GemLife over-50s lifestyle resorts also include solar panels as standard as well as connection to a Virtual Power Plant which reduces electricity bills even further. Some homeowners report receiving no power bills at all.
Learn more about GemLife’s Virtual Power Plan Program.
What are the Benefits of a Land Lease Community?
We covered some of the immediate benefits of buying in a land lease community – no stamp duty, eligibility for rental assistance and reduced home operating costs – but there are other financial and social benefits that you should consider when making your downsizing decision.
Unlike for retirement villages, the contract in a land lease over-50s lifestyle community is simple:
- A contract to purchase your own home
- A contract to pay a modest weekly site rental
Meanwhile retirement villages often have complex contracts with many different types of fees.
Let’s explore some of benefits of land lease communities in comparison to traditional retirement offerings:
No Exit or Deferred Management Fees
Land lease communities have no exit or deferred management fees which is one of the most significant differences between these lifestyle resorts and traditional retirement villages.
When deferred management fees are added to capital gains and refurbishment charges, you and your family may receive less than the original sale price.
Learn more about retirement village exit fees and deferred management fees here.
You Can Keep Your Capital Gains
Did you know that some retirement village operators charge a capital gains fee on the sale of your home? This can be between 35 and 50 percent of the capital gains your property has achieved over time.
This amounts to tens of thousands of dollars that you might be counting on to fund the next stage of your retirement or that you intend your family to benefit from. These types of fees have serious financial implications and can catch retirees and their families unawares.
However, in land lease communities, you own your own home, so all capital gains are yours.
Learn more about other retirement village costs to be aware of here.
Downsizing Financial Benefits
To help alleviate Australia’s housing crisis and to reduce the burden on the aged care system, the Federal Government has introduced incentives for older adults to downsize. One of these incentives is excluding the proceeds to the family home from assets when calculating the age pension.
Couples can add up to $600,000 to their superannuation from the proceeds of the sale of the family home, and this also includes those over the age of 70 who are otherwise prevented from adding to their superannuation.
Learn more about how Over 50s Resorts like GemLife help alleviate Australia’s housing crisis.
Strong, Close-Knit Community
The financial advantages are just one of the reasons why an increasing number of people are choosing land lease over 50s lifestyle resorts.
Another important consideration is feeling as though you are part of a community of like-minded people. In the right lifestyle resort with excellent facilities, there is no shortage of things to do and new friends to do them with.
Homeowners report feeling greater peace of mind knowing they have friends and immediate neighbours to rely on in times of need.
After losing her husband of 30 years to cancer, Kay was struggling to get through each day but then she discovered GemLife Bribie Island and suddenly the doors opened to new friendships and experiences.
Kay, who is in her early 70s, said moving into the resort, combined with friendships she made within the first few days of arriving, literally `changed her life’.
“I was in a really dark place when I first moved in and didn’t even know how I would go about meeting new people because I always had my husband with me and now, for the first time, I was alone,” said Kay.
That changed very quickly thanks to neighbours like Rob and Pauline who immediately reached out and welcomed her into the fold.
Learn more about Kay’s story here.
Resort Living Lifestyle
Resort-style living is another popular reason to buy a home in a land lease over-50’s lifestyle community. Resorts designed for the active over-50s lifestyle, like GemLife will include five-star level Country Clubs many of which will have the following facilities:
- Lounge and bar
- Wine room
- Ten-pin bowling
- Library
- And more
Sporty types can also play tennis, pickleball or lawn bowls. Many resorts also include a Summer House with outdoor resort-style pool, sunlounge areas and barbecue facilities as well as residents’ workshop.
GemLife resorts have dozens of different resident-run groups that homeowners can join.
Find out more of GemLife’s premium resort facilities here.
How Does a Land Lease Community Differ from a Retirement Village?
A land lease community or over-50s lifestyle resort might resemble a retirement village on the outside but has a very significant point of difference on the inside.
This is why it is important to take the time to do your homework and truly understand the differences – not only in lifestyle and amenities, but also how the different contracts might affect your finances now and into the future.
Transparent Fee Structure
The primary way land lease over-50s lifestyle communities differ from retirement villages is in their financial structure.
Land lease communities have two simple contracts:
- The purchase of your home, which you own outright
- The weekly site rental
Retirement village contracts, by contrast can be incredibly complex – some are more than 200 pages long – and can include entry and exit fees, deferred management fees, capital gains fees, service fees, refurbish fees and more.
Quality of Life
Luxury homes rightsized for the lifestyle you want to live today gives you more time to do the things that you want to do. You have the lock-up-and-leave convenience for travels. And at GemLife, homeowners can also hire Explore by GemLife motorhomes at rates that are much less than commercial hire operators.
Community and Engagement
Whether you’re an active extravert or a low-key introvert, a land lease community lets you live life the way you want to.
Homeowners organise social activities, group dinners, special events, happy hour, group tours, sports teams, creative arts groups, performing arts groups and charity fundraising events that you can choose to take part in as you wish.
Active Lifestyle
Land lease communities tend to attract younger homeowners aged from their mid-50s who are more interested in an active lifestyle, including spending a lot more time on travel.
That means the resort facilities in these resorts have been designed to create more opportunities to meet your fitness goals or discovering a new sport or hobby.
GemLife also has a health and lifestyle coordinator who hosts activities for homeowners in GemLife resorts across the country. The company also hosts the GemLife Games, a one-day sporting event featuring representatives from resorts playing in one of seven sporting competitions.
Discover a Lifestyle with GemLife That is More You
Experience the best that GemLife has to offer in some of Australia’s most desirable locations. Nestled throughout Australia’s most sought-after seachange and treechange locations, GemLife has premium resort-style living for over 50s looking to start their next chapter.
With state-of-the art amenities, facilities and homes, GemLife offers the perfect lifestyle for those looking to ‘rightsize’.
For more information, contact our specialist team or request an info pack.
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