What Are the Differences Between Hometown Australia Communities & Retirement Villages?
Are you ready to downsize, but aren’t sure what kind of community will suit you best? Not sure what the difference is between a Land Lease Living community and retirement village? You’re not alone; it’s one of our most commonly asked questions!
In this article, we’ll clarify the differences between Land Lease Living community and retirement villages, and answer all the questions you might have about them. We also have an article exploring the differences between Land Lease Living and traditional home ownership, which many readers find useful.
Selling the family home is a big decision, and Hometown Australia ensures you have all the information you need to make the right choice for you.
Active, independent living: what Hometown Australia Land Lease communities are all about.
Age and Independence: Who Lives Where?
Depending on your life stage and ideal lifestyle, some communities will be a better fit for you than others.
For example, retirement villages have an average entry age of 78+, and suit residents who require some degree of care and support. Retirement communities will often be home to both older residents who need occasional support and those who need daily home care. While they may have access to communal facilities, the primary purpose of retirement villages is to make visits from healthcare professionals more accessible and convenient.
Hometown Australia’s Land Lease Communities are better suited to a younger demographic, with an average entry age of 50+. Residents of these communities may be working, semi-retired, or retired, and live independently without home care.
The lifestyle benefits of Hometown Australia’s communities are the primary draw for residents, whereas retirement villages are usually chosen for the provided support.
Understanding the Key Legal Differences Between the Ownership Models
How do retirement villages work?
Depending on the options available, retirement villages will usually operate based on long-term leasehold arrangements or Strata Title contracts.
Strata Title means you buy into the retirement village by paying the agreed purchase price to the unit owner, usually through the retirement village operator. However, you’ve just purchased a freehold title to the unit; this is the right to live in the property, not ownership of the land or structures built on it.
How do Hometown Australia communities work?
Hometown Australia communities use the Land Lease Living model. This means that you purchase a home and lease the land it is built on, in order to enjoy reduced costs. Unlike Strata Title contracts, Land Lease Living means you do actually own the structure.
Cost Structures: Breaking Down the Financial Differences
While you may need additional care someday in the future, Land Lease Living communities are an excellent decision in the meantime. In fact, there are very few pitfalls of Land Lease Living communities compared to retirement villages.
In addition to the active lifestyle and fantastic amenities, Hometown Australia’s communities offer superior financial benefits. From surprise fees like exit and deferred management fees to lost capital gains, there are many costs associated with retirement villages that you might not have considered. Let’s explore:
| Feature | Land Lease | Retirement Village |
|---|---|---|
| Home Ownership | You own your home and lease the land | You purchase the right to live in a unit/villa but do not own the home |
| Capital Gains | You keep 100% of the profit when selling your home | Village operators may share some or all of the profit on sale |
| Entry Fees | No entry fees, just the cost of purchasing your home. | As you do not own the unit/villa, your upfront purchase price is better considered an entry fee. On average: $250,000 – $800,000+ entry contribution |
| Exit Fees | No exit fees | Exit fees typically range from 25% – 50% based on purchase or sale price |
| Government Subsidies | If you receive any government pension, you may be eligible for rental assistance, which may be paid towards the cost of your site fees. | Rental assistance available if entry cost is under $203,000 (as of July 2019) |
| Ongoing Fees | Site fees (can be offset by government subsidies) | Fees to owners’ corporation and village operator for services and operations |
| Duties & Bills | Zero stamp duty payable and no council rates | Usually incur both stamp duty and council rates |
Differences in Management and Lifestyle
You should enjoy your retirement and lifestyle the way you like. Retirement villages and Hometown Australia’s Land Lease Living communities have very different approaches to your golden years, and one might suit you better than the other.
Retirement villages are run by professional aged carers, who will put together a strict schedule of organised activities. They’re perfect for older residents who are looking for someone to help take care of maintenance jobs around their homes.
Hometown Australia offers community living for like-minded over 50s who prefer an independent lifestyle. This means you can look forward to self-managed activities that are more like social occasions. There’s a focus on independence and living an engaged and socially active lifestyle.
Stay active and social with pickleball or enjoy the different amenities available at Hometown Australia communities.
Facilities and Services: Finding a Community to Suit Your Lifestyle
Hometown Australia’s communities provide a wide range of amenities, like pools, tennis courts and more. Some communities offer gyms and cinema rooms, while others have bowling greens and reading rooms.
Many of these Land Lease Living communities are pet friendly, and most offer a clubhouse to help foster community connection and engagement. If you have your eye on a particular amenity, this might help you narrow down which Hometown Australia location is right for you — there are so many to choose from!
While many retirement villages will have communal spaces you can use for book club meetings or a milestone birthday celebration (and some very special ones might have a pool), the emphasis in these communities is less on recreation. A lot of the facilities on offer are focused on care, medical support, and organised transport. These facilities are particularly useful for residents who are less independent.
Your Government Benefits
If you’re still tossing up between communities that emphasise lifestyle and traditional retirement villages, you may also need to consider the impact on your government benefits. Depending on which style of home you go with, there may be implications for your pension.
For example, Strata Title retirement homes will still count towards the Pension Asset Test, if the cost is near market value — even though you don’t actually own the land or structure. Let’s take a look at some other financial considerations:
| Financial Consideration | Hometown Australia | Retirement Village |
|---|---|---|
| Government Subsidies | If you receive any government pension, you may be eligible for rental assistance, which may be paid towards the cost of your site fees. | As a pensioner, you may be eligible for rental assistance if you paid under $203,000 to enter the village. (As of July 17 2019). |
| Downsizer Super Contribution | Eligible | Eligible |
| Stamp Duty | Zero Fee | $20,000 – $72,000, depending on property price and state |
| Council Rates | Zero Fee | Averaging $700 – $1,800 per year, depending on the council and house value |
| Pension Asset Test | As you own your Hometown Australia home, you are considered a Homeowner for the asset test. | If you paid near market rate, you will be considered a homeowner despite not owning the land or structure. If you did not pay market value, you may not be considered a homeowner for the asset test. |
Read more about possible benefits to your government subsidies when purchasing a Hometown Australia home in our article about the financial benefits of downsizing. *Please Note: Hometown Australia strongly recommend you make your own enquiries as each individuals circumstances and eligibility are different.
Making the Right Choice for You
When it’s time to choose the right community for your golden years, there are a few things to consider. Firstly, your current age and health, followed by your financial position and desired independence level. You might need to consider future care needs, or perhaps you’re currently focusing on your lifestyle preferences.
Hometown Australia can help you find the right community to suit your needs and lifestyle. Browse our communities online today, or get in touch to find out more.
