Residential Parks flexing their muscles with the 50+ market

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Retirement villages are facing an aggressive competitor with the rapid emergence of residential parks that claim to offer lower entry costs, bigger homes, resort facilities, no DMF’s – all with possible government rental subsidies of up to $52 per week.

In America residential parks claim to account for up to 10% of new homes; Queensland and Northern NSW have caught the same bug and now Victoria and WA are catching on.

They are not age specific and generally attract people in their 50’s, with many still working. There is no real attempt to cater to the needs of ageing residents moving into their 70’s and 80’s who will have extended needs.

The basis of the industry is that residents buy the house but lease the land it stands on. This means new residents pay only about 60% of a typical house/land package. They have ‘ownership’ and keep the ‘capital gain’ when they sell the house. The weekly land rental covers all ‘resort facilities’.

A new free standing 3 bedroom home an hour from Sydney can cost $240,000 plus $100 per week rent, less rental assistance of say $50. Net cost per week $50 or $2,600 per year. There are no other costs except utilities and insurance.

A new retirement village home in the same vicinity will cost $400,000 with $75 a week fees ($3,900 per year), no capital gain and 30% DMF or $120,000.

Residential park homes need to be ‘relocatable’. In Queensland they can be built on site but in NSW they need to be manufactured offsite.

Most parks have a ‘resident committees’ but they operate under the Manufactured Homes (Residential Parks) Act, with different degrees of resident protection to the Retirement Village Act. There is no escaping that the resident is leasing and the lease can be terminated.

While on paper residential parks appear financially attractive, retirement villages still win residents because of the security of tenure they offer and the security of a community of like aged people.