While protracted lockdowns and the remote work revolution have sent many home hunters seeking more space, the circumstances surrounding COVID-19 appear to have accelerated a different trend: downsizing.
A new report from downsizing.com.au has highlighted the rapid increase in demand for properties in land lease communities, which have traditionally allowed those in or nearing retirement age to purchase a dwelling and then lease the land on which it sits, avoiding the payment of stamp duty and council rates.
Generally large developments with numerous amenities run by a community operator, they’ve long been an attractive option for over 50s seeking the lifestyles they offer, as well as the financial benefits. COVID-19, it appears, has spurred interest in this living option due to a number of marketplace trends brought about by the pandemic.
Internal migration towards regional areas as well as a growing acceptance of remote working conditions have been two big factors driving interest in land lease opportunities among younger downsizers who are still in the workforce, the report found.
Moreover, a strong property market has also been a big contributor, with over 50s enticed to sell their family homes while the market is hot.
And the isolation that many felt during long lockdowns confined to their local neighbourhoods has also been a factor as an increasing number of buyers seek to live among social communities.
Amanda Graham, CEO of Downsizing.com.au, said lease living has been rapidly evolving from a niche to a mainstream housing option during the COVID-19 pandemic.
“It’s clear that land lease communities are offering what buyers are looking for in the COVID-19 era, as property prices escalate and people want an alternative to being isolated in their suburban homes,” Ms Graham said.
She noted that financial incentives are a big driver. The least expensive land lease home in the surveyed communities analysed by the report was between 11 to 70 per cent cheaper than the median house price in the surrounding suburb. Stamp duty savings ranged from $2,390 to $19,630.
Additionally, community members who receive commonwealth rent assistance payments are able to use the grants to subsidise the cost of ongoing land lease site fees – another incentive.
With the surge in interest, it’s no surprise that companies facilitating land lease options have rapidly scaled their activity over the last 18 months.
“In the wake of this increased consumer interest, we’re seeing major companies coming into the industry, and existing operators ramping up development activity,” Ms Graham noted.
ASX-listed provider Ingenia, for example, increased its number of permanent lifestyle sites by 24 per cent in 12 months alone, from 2,968 in June 2020 to 3,681 in June 2021.
Another ASX-listed provider, Lifestyle Communities, had 4,834 homes completed or under development in its communities at the end of June 2021, compared to 4,494 at June 2020.
And property developer Stockland signalled its entry into the land lease industry, proposing the construction of 10 new communities comprising 2,000 homes.
ABOUT THE AUTHOR
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.