Retirement village or land lease community?

When deciding where to live in your retirement years there are many types of accommodation to consider. Two of the most popular options are retirement villages and land lease communities. Both options cater to different needs, budgets and lifestyles, offering residents flexibility and choice.

These two retirement living options can appear very similar and offer many of the same advantages – including a closer social network and facilities such as swimming pools, bowling greens and gyms. However, it’s important to understand that there are also fundamental differences between the two.

Let’s look at the differences between retirement villages and land lease communities and how they meet the varied needs of older Australians.

What is a retirement village?

Retirement villages are a well-established type of housing for retirees. They offer independent living for older Australians and increasingly include care and support services, alongside on-site amenities. What’s unique about retirement villages is the variety of ownership agreements they offer. Most villages are leasehold or licence, where residents purchase a long-term lease or licence for their home, and some villages are freehold/strata, where residents own their home and have a share in community facilities. Retirement villages attract older retirees who are seeking safety, security, social connection and who have a care need or are planning for future care needs.

The benefits of a retirement village include:

• Guaranteed buyback options and village fees charged on a cost-recovery basis, which provides financial security.
• No stamp duty on entry for leasehold villages.
• Purpose-built for low maintenance, reducing upkeep responsibilities.
• Designed for independent living with features such as wheelchair accessibility, handrails, and safety aids.
• Increasing integration with on-site care services or proximity to aged care facilities.
• Abundant social opportunities, with amenities like gyms, bowling greens, and community centres, set within social, caring communities.

What is a land lease community?

A land lease community, also known as a lifestyle community, manufactured home estate, over 55s village or residential park, is typically nestled in scenic locations, often on the sites of former caravan parks. Here, residents own their ‘manufactured home’ or ‘moveable dwelling’ but lease the land it sits on. They have two agreements: one for purchasing their home and another for renting the land. Regular site fees contribute to maintaining community facilities and grounds.

The benefits of a land lease community include:

• Exemption from stamp duty and council rates.
• Potential eligibility for government rental assistance for Age Pension recipients.
• Scenic locations often with resort-style amenities like pools, tennis courts, and clubhouses.
• Generally affordable homes, making it accessible for retirees with limited capital.
• Appeal to active, younger retirees seeking recreational opportunities.

What are the key differences between retirement villages and land lease communities?

Simply put, they differ in legislation, financial setup, contracts, consumer protections and suitability. The table below compares the most common agreement type in retirement village (leasehold or licence) with typical land lease agreements. Importantly, when assessing the total cost of living in a retirement village or a land lease community, the ingoing, ongoing and outgoing costs should be considered together.

Both retirement villages and land lease communities offer unique benefits. Whether you prioritise integrated care and community living in retirement villages or seek affordability and scenic settings in land lease communities, each option caters to older Australians looking for the right fit for their next chapter.

The Retirement Villages Act gives peace of mind

The major difference between retirement villages and land lease communities is that retirement villages are covered by the Retirement Villages Act, which sets out the rights and responsibilities of retirement village operators and residents.

The Retirement Villages Act secures the residents’ tenure, so that in the future if a village changes operators the original contract must be honoured. The Act also sets out standards for how a village must be run. These ensure that residents have a consistent experience of living in a village, including the process of how they enter and vacate.

On the other hand, land lease communities are generally governed by the same legislation that covers caravan and mobile home parks in each state. While these laws clearly state the obligations of both operators and tenants, they don’t afford the numerous benefits specific to the Retirement Villages Act.