What's the difference between a land lease community and a retirement village

The decision to move from your family home during your retirement years can be life changing. This is why you should make sure that change is for the best and can deliver the lifestyle you want to enjoy in a financially viable way.

With so many options, understanding the difference between a land lease community and retirement living is an excellent place to start. There can be some confusion around how tenancy operates, so we’ve compiled a summary below of the fundamentals of both options.

What is a land lease community?

In a land lease community , you own your ‘manufactured home’ or ‘moveable dwelling’ (such as a caravan or prefabricated cottage) but lease the land it occupies from the community operator. There are about 100,000 residents living in around 900 land lease communities across Australia.

You generally don’t pay stamp duty, body corporate fees, council rates or exit fees in a land lease community. Your regular site fee goes toward maintaining the land lease community facilities and grounds.

What is a retirement village?

In a retirement village, there are a range of tenancy types.  You might, for instance, buy a unit in a strata scheme, hold a long-term lease, make regular rental payments, or even buy shares in the village.

Depending on your tenancy arrangement, you may need to pay stamp duty and body corporate fees – if it’s strata, for example. An ongoing general service charge covers the cost of shared services and facilities. There may also be entry and/or exit fees associated with retirement living villages.

What are the benefits of a land lease community?

• Land lease arrangements don’t attract stamp duty or council rates 
• Because you own your home, you can keep 100% of the capital gains (although capital gains on, say, a caravan, could be negligible)
• If you receive the Age Pension, you might be eligible for government rental assistance
• Land lease communities are often located in lovely surroundings and can have resort-style amenities – think pools, tennis courts and clubhouses
• They often attract active retirees, which can be a good option for those wanting plenty of recreation and social connection.

What are the benefits of a retirement village?

• Retirement villages offer a range of tenancy agreements 
• Typically, a retirement village will offer a guaranteed buyback
• They offer many opportunities for social connection and recreation and promote an active lifestyle. They often have access to swimming pools, gyms, bowling greens, community rooms and other facilities
• Retirement villages are purpose built to be low maintenance and reduce the burden of upkeep
• They are built to help you live independently for as long as possible, with features such as wheelchair and walker accessibility and have homes fitted with handrails and safety aids
• Retirement villages can offer a high level of security to their residents
• Some are often partnered with, or close to, aged care residences, which can make a transition smoother if required.

What to be aware of

Deciding where to spend your retirement years will take a lot of consideration and research. There is a wide range of options and differences within each category. It can seem daunting and it might be worth asking your grown children or other family members to help you decide.

It’s crucial that you have a good handle on the financial obligations of whatever retirement living option you settle on. The potential advantages of owning versus leasing might, for example, be offset by other limitations, so it’s important to get the complete picture from your provider to make the right choice.

You might also want to consider other questions regarding rules and regulations around visitors, pets, subletting, upkeep, fee increases and utilities.