As our population ages, there is an increasing demand for retirement housing options that provide a sense of community, security, and convenience. Loan-lease Retirement Villages have emerged as a popular choice for retirees seeking an affordable and low-maintenance lifestyle. These unique communities offer a fresh take on retirement living, combining the benefits of homeownership with the amenities of a modern retirement village.
Buying into a loan-lease model makes moving into a retirement village more affordable. While the operator retains ownership and all the maintenance responsibilities, the tenant has the exclusive right to live in the home. The tenant also has access to the amenities on site, the community, and its organised activities, as well as support from community management teams.
However, despite their popularity and benefits to its residents, this model of retirement village living remains one of the most misunderstood and misrepresented types of retirement housing solutions. As such, to improve understanding about this type of retirement housing option, we have outlined some of the key features of a loan-lease retirement village in this article.
A loan-lease retirement village, also known as a lease-for-life or right-to-occupy village, is a specialised housing community designed to cater to the needs and desires of retirees. They are a form of retirement housing that offers a cost-effective way for seniors to enjoy an active and independent lifestyle.
Unlike traditional homeownership or rental arrangements, rather than purchase the property, residents in these villages buy the right to occupy a home within the village for a specific period, often ranging from 49 to 99 years.
The loan-lease model is widely utilised with approximately 80% of retirement villages in Australia, including Mount Gilead Estate, adopting this model. There’s a good reason for this widespread adoption.
Moving into a loan leas retirement village provides most of the benefits of home ownership without the responsibility of ongoing maintenance. This model also offers a mutually beneficial arrangement where residents can relish a higher standard of living in their retirement years than they might typically afford, while village owners can secure funds for ongoing development.
The basic structure of loan-lease retirement villages involves the following elements:
The cornerstone of a loan-lease retirement village is the lease agreement. Residents enter a legal contract with the village owner, granting them the right to live in the village for the duration specified in the agreement which is normally a 99-year lease.
One of the key benefits of a loan-lease retirement village is the maintenance-free lifestyle. While you get all the benefits of home ownership, the property ownership as well as responsibility for upkeep and maintenance remains with the village owner.
To secure the right to occupy a residence in the village, residents typically make an initial upfront payment, which is often referred to as a “loan” or “premium”. This payment is a significant feature that distinguishes loan-lease villages from traditional property purchases.
This payment is directed to the village owner in the form of an interest-free loan for the duration of your occupancy. In return, you are granted a 99-year lease, exclusive use of your residence, and access to all the village’s amenities.
The absence of stamp duty is a feature specific to loan-lease retirement villages and may not apply to other forms of retirement housing or property transactions.
Stamp duty laws and regulations vary from place to place, and they are primarily designed to cover transactions involving the transfer of ownership or title to real property. The legal structure of loan-lease retirement villages is specifically designed to provide retirees with occupancy rights while circumventing the legal ownership of the property itself. This structure allows residents to enjoy the benefits of living in a retirement village without the financial burden of stamp duty, which can be a substantial cost in traditional property transactions.
One of the biggest issues facing people as they age is transitioning from a large home to smaller accommodation and (in some cases) nursing care. Many loan-lease villages offer a continuum of care, allowing residents to transition to higher levels of care, such as assisted living or nursing care, without needing to sell their property or move elsewhere.
At Mount Gilead Estate, we have developed a village and amenities that enable true aging in place. That is, if the circumstances of a couple or single resident change, we have the scale and product diversity (including services) for them to transfer from one form of accommodation to another and add more services as required.
This removes the stress of having to move away from the community where they have formed strong friendships and bonds and residents can therefore continue to benefit from the support networks that they are familiar with.
Loan-lease retirement villages are renowned for the wide range of amenities they offer. These amenities often include community centres, fitness facilities, organised social activities, dining options, and even healthcare services. These facilities are readily accessible and designed to promote social interaction and enhance residents’ quality of life.
Mount Gilead Estate has an array of facilities and services, social activities, health and wellness activities, creative and artistic pursuits, and 24-hour support which cater to the needs of an ageing resident population. Some of the facilities include a golf course, three-story clubhouse, a lawn bowls green, a games room, an indoor heated swimming pool, gym, and more.
The village at Mount Gilead Estate also provides an extensive range of services that are designed by the community for the community. We have a highly active resident group and numerous committees and social groups that work with the management team to facilitate social interaction, education, fellowship, and assistance for residents and the broader community. You can view Mount Gilead Estates’ action-packed calendar of events online.
One of the significant advantages of loan-lease retirement villages is that they often include landscaping, exterior home maintenance, and communal area upkeep as part of the community fees. Maintenance and repairs of the infrastructure, such as plumbing, and electrical, are also included as is pest control and regular cleaning of the exterior of buildings, walkways, and driveways.
Rapid response to emergency repairs, such as plumbing leaks, electrical issues, or structural damage, is typically part of the maintenance services to ensure the safety and well-being of residents. The retirement village also typically covers the cost of utilities like water, electricity, and gas for common areas. The collection and disposal of rubbish and recycling are also often included in maintenance services to maintain cleanliness within the village.
Loan-lease retirement villages eliminate many of the traditional homeownership responsibilities and this benefit is often a major factor for retirees in deciding to move into this type of village.
The day-to-day operational costs of the village are shared among all residents, typically in the form of a monthly fee known as a “Recurrent Charge”. This fee covers a range of expenses, including Council Rates, Water Rates, Lawn Mowing, Gardening, Insurance, Interior and Exterior Building Maintenance, and more.
Mount Gilead Estate recurring monthly fees start at less than $87 per week or $374 per month, offering great value and some of the lowest ongoing levies for retirement villages. The 2021 Property Census Report found the Sydney metropolitan average service fee paid for a two-bedroom independent living unit was $612 per month.
Loan-lease retirement villages offer a unique and financially attractive alternative to traditional homeownership for seniors looking to enjoy their retirement years in a secure and amenity-rich environment. With lower upfront costs, predictable ongoing expenses, and access to various amenities and services, these communities provide a compelling option for retirees seeking an active and comfortable retirement lifestyle. By carefully reviewing the lease terms, evaluating the village facilities and available services, and considering specific provisions like the return of the premium, retirees can make an informed choice that aligns with their financial and lifestyle goals as they embark on their retirement journey.
If you want to know more about loan lease villages or Mount Gilead Estate, get in contact with our sales team.
Visit Mount Gilead Estate to see what your retirement could look like. Tour the village to see our resort-style retirement facilities.
Complete the form with your details and preferred tour times or any questions you have and a member of our sales team will be in touch.
