This new retirement option could bring country living to the inner city

Over the past 20 years, land lease communities have evolved from cabins in caravan parks to offering a selection of accommodation and amenities – all the way from the super affordable to luxury resort style living (with a price tag to match).

And recently, in a move set to revolutionise the sector, the first vertical land lease community has been approved on the Gold Coast.

A land lease community at Buderim in Queensland.

The legal and financial structure of land lease communities allows residents to buy their home and rent the land on which it sits. The land needed for the homes and the amenities (many have clubhouses, bowling greens, pools and cinemas) has meant that these communities have been on the urban fringe or in regional locations.

The ability to build vertical communities will open up opportunities closer to city centres. Although vertical communities may look more like apartments than caravans, the homes or apartments will still need to be demountable to meet the legislative requirements.

The unique financial structure of land lease communities means that for calculating the pension, residents are homeowners with their home an exempt asset, and they can qualify for Commonwealth rent assistance of up to $211 per fortnight on top of their pension because they rent the land on which their home sits.

The site fees are normally payable as long as your home is on the land, which includes after you move out but are waiting for your home to sell. While your home can technically be demounted, doing so is not a cheap exercise with many homes needing to be cut up into two or three pieces, services disconnected and then reassembled and connected in a new location.

Moreover, much of the value of the home is in the community in which it sits. Removing it is likely to cause a significant loss in value on top of the cost.

Many residents of land lease communities are attracted by the modern homes, the amenities and the social connections they offer. Financially they typically offer a basic model – you buy the home and lease the land with no stamp duty upfront or exit fees when you leave.

While some homes in these communities have seen significant capital growth, others have seen delays in selling and capital losses.

Land lease communities operate under state-based legislation, and generally speaking, you pay your site fees until your home sells and there is no guaranteed buyback. However, in Queensland there is a scheme that enables lane lease residents to apply for a 25 per cent rent reduction after 6 months and a buyback of their home after 12 months.

The first vertical land lease community will be built by GemLife and is expected to cost $450 million. There will be six three-level buildings and one four-level building, accommodating 205 three-bedroom homes.

While the development sits on a huge 14 hectare site, 70 per cent is designated as green space with more than 100,000 new plants being used to create public and private spaces as well as wildlife corridors.

The three level country club, includes a 55-seat cinema, two bowling alleys, a 25-metre indoor pool with spa, three lawn bowls rinks, a pickleball court, a gym, a hair salon, a wine room, a workshop and consulting room.

While prices are yet to be released homes in other GemLife communities start at $1.2 million with the weekly site fees starting at $259.

If you are thinking about downsizing into a retirement community it is important to understand your rights, responsibilities and costs upfront, while you live there and after you leave.

Rachel Lane is the author of the bestselling book Aged Care. Who Cares? and Downsizing Made Simple with fellow finance expert Noel Whittaker. The new edition of Downsizing Made Simple is now available online.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.