Land lease communities vs retirement villages

When considering a move to a retirement community, you may come across two popular models — retirement villages and land lease communities. While both offer lifestyle benefits, they are fundamentally different in terms of contracts, costs, and financial implications.

One of the big attractions of a land lease community is the absence of an exit fee. But is it really the better financial option, or is there a catch?

How land lease communities work

A land lease community is a model where you own your home but lease the land it sits on. This means:

✅ You have full ownership of your home and any capital growth (or loss) when you sell.
✅ You pay a site fee (rent) for the land.
✅ You are responsible for all maintenance and selling costs.

One key thing to consider is that site fees continue until your home is sold or relocated — even if you move out. It’s important to check how long you can lease the land to ensure it aligns with your long-term plans.

How retirement villages differ

In a retirement village, you don’t own your home in the same way. Instead, you enter into a long-term lease or licence agreement — often for 50, 99 years, or even lifetime tenure.

✅ The ongoing village fees (often called a general service charge) are based on cost recovery, meaning the operator cannot profit from them.
✅ When you leave, an exit fee (deferred management fee) applies — often around 30%, but it can range from 0% to 100%.
✅ In some cases, you may be entitled to a guaranteed buyback if your home doesn’t sell within a set period (often 1 to 18 months).

The exit fee in retirement villages helps cover village costs and any discount applied to your purchase price. In some cases, residents share in capital gains or losses, and there may also be renovation and marketing fees to consider.

Which option is right for you?

Both models have their pros and cons — it’s not a case of one being better than the other, but rather which one aligns with your needs. Some key questions to ask:

🔹 How long do you plan to live there?
🔹 Do you want the potential for capital gain, or do you prefer financial certainty?
🔹 How will site fees or exit fees impact your cash flow, pension eligibility, and estate planning?

Understanding the ingoing, ongoing, and outgoing costs is essential for making an informed decision. A Village Guru Report can help compare options by outlining these costs in detail, as well as estimating pension entitlements and rent assistance eligibility.

Need help making the right choice?

Downsizing is a big decision, and getting the right advice is key to avoiding regrets. Our Village Guru Report breaks down the costs of different retirement living options, helping you compare and plan with confidence.

🎧 For a deep dive into the differences between land lease communities and retirement villages, listen to the RetireRight podcast with Glen James, featuring Rachel Lane.

🔍 Want to explore your options? Use our find a village tool so you can get a FREE Village Guru Report.