Are you a retiree who wants to downsize but don’t know what’s the best option?
First of all, it’s important to look at what your own personal preferences are with rightsizing and how you want to live. What type of accommodation are you best suited to? Would you want to move in with family… (good for some, but not for all) Or would you be better off at a lifestyle estate – sometimes referred to as an over 55s community.
Many Australians over 55 are satisfied with living in their family home as it becomes a source of security and holds memories from the past. They comfortably age in place with modifications made to the home and the extra room is used to welcome guests or start a hobby.
However, the size of the garden, associated costs for utilities, rates and cleaning can become a burden which may fall onto their children to assist with maintenance and bills.
By choice, or due to changes in circumstance, a cash injection may be required and the sale of a major asset, such as the family home, will release some equity and increase the cash reserves to make life after 55 a little more comfortable.
After the decision is made to sell the home you will then need to consider the variety of property types available to commence your rightsizing journey. We’ve detailed some of these here:
Living with Family or in a Granny Flat
The lucky few that have the opportunity to live with family or in a small flat on family property may decide this is the best option due to the savings on costs and ease of living. However those that are looking for more independence, or see difficulties integrating with a younger family dynamic, may decide this option not as desirable. Additionally, there are Centrelink regulations to review on granny flats that could affect your pension and whether you’re assessed as a homeowner or non-homeowner. We recommend you seek advice from a financial planner who specialises in this area.
Renting a House
Private rental delivers a certain amount of flexibility so you can consider all the options. This breathing space can be used to give you more time to decide what you want to do or where you want to live. On the other end of it, renting can leave some over 55s quite vulnerable with a number of negatives to consider. Short lease agreements, high turnover rates, security of tenure and the wrong type of neighbour can leave renters with the feeling of uncertainty, stress and in a potential risk of homelessness.
Apartment Living
If the urban jungle is calling, apartment living may be a good option with locations in high density inner city districts, close to amenities and walking distance to entertainment and restaurant precincts. Keep in mind apartments are a popular choice for young (or young at heart) dwellers, so your neighbours might not always be as like-minded as you are. And if you’re thinking of purchasing, make sure you make allowances for the body corporate fees in your budget.
House and Land Package
Brand new house and land packages are a popular choice with their modern, open plan homes in brand new suburbs with master planned amenities and facilities. New housing estates are generally targeted to first home buyers or young families with product geared for medium to large sized blocks of land and floor plans, defeating your rightsizing objective. Additionally, housing demand in capital city growth corridors are escalating at unprecedented rates and this is having an inflationary effect on prices. With opportunities for quality, affordable home purchases becoming limited you may be priced out of the neighbourhood of your choice.
Retirement Villages
On the surface, people find it difficult to compare the affordability of different villages with their complex or different legal and financial arrangements. While no two retirement villages are ever exactly the same there are major differences and it can be confusing to navigate. Retirement villages operate under the Retirement Villages Act and you have a lease or ‘licence to occupy’. There are a range of costs to consider including the ingoing contribution (purchase price); the monthly maintenance fee; a deferred management fee (a percentage paid to the operator when you leave often between 15% – 35%); and a share of capital gain that you also share with the operator of the village on exit.
Over 55s Lifestyle Communities/ Land Lease Communities
Land Lease Communities are well-established in Europe and the US with 19.2 million Americans living in over 50,000 communities, where by they own the home and lease the land. These communities use modern manufactured homes set within a master planned community using extensive landscaping and resort-style facilities in a secure, gated community with a village manager.