If you’re looking to downsize your home, one smart way to do it could be to buy into a land lease community. You would still own your own home, just not the land it sits on. You lease the land instead to free up some of your funds, and you could also be eligible for Rent Assistance.
Please note that what we say in this article is not financial advice. Everyone has different circumstances and you should check government websites and talk to your financial adviser before making any decision for your future.
How do land lease communities work?
If you buy into a land lease community, you will be renting (i.e. leasing) the land that your home sits on in a residential community. This is different from a traditional freestanding house purchase where you buy both the home and the land.
You pay a regular lease fee (i.e. rent) for the land your home sits on, which entitles you to access all of the community facilities. This fee also covers on-site community management and maintenance, as well as other typical land ownership costs such as council and water rates, and body corporate/strata fees if they apply.
The long-term lease cannot be altered without your consent and it cannot be revoked even if the overall ownership or management of the land lease community ever changes. So you have guaranteed tenure for life in the community once you buy into it.
What is Rent Assistance?
If you’re a current homeowner, you’re probably not familiar with Rent Assistance payments that are offered to eligible recipients by Services Australia. But land lease communities qualify as a rental agreement for the purposes of Rent Assistance.
If you currently receive a full or part Age Pension, then you will qualify for Rent Assistance if you buy into a land lease community.
The best part is you don’t need to formally apply for Rent Assistance payments if you do. Once you let Services Australia know your new living arrangements (which you must do within 14 days as part of the Age Pension requirements), they will automatically make you eligible for Rent Assistance provided you qualify.
How much Rent Assistance can you get?
This depends on how much you pay as part of your land lease community agreement, as well as your living arrangements. You must be paying a minimum fortnightly rent amount to be eligible for any Rent Assistance. There is also a cap on the amount of fortnightly Rent Assistance you can receive.
Standard Rent Assistance rates for empty nesters are outlined in the table below. They are reviewed and adjusted for inflation in March and September each year, just like Age Pension rates are.
| Living arrangement | Minimum fortnightly rent payment to be eligible | Minimum fortnightly Rent Assistance payment | Maximum fortnightly Rent Assistance payment |
| Single person | $135.40 | 75 cents for each dollar of fortnightly rent above $135.40 | $151.60 |
| Couple | $219.20 | 75 cents for each dollar of fortnightly rent above $219.20 | $142.80 |
| Couple separated due to illness | $135.40 | 75 cents for each dollar of fortnightly rent above $135.40 | $151.60 |
| Couple otherwise temporarily separated | $135.40 | 75 cents for each dollar of fortnightly rent above $135.40 | $142.80 |
Want to learn more about making the most of your next 30 years?
Retirement living can be the best time of your life. We’re committed to making life better for the over 55s. Check out downsizing.com.au for more insights and great advice on living life to the fullest. We also have a great range of ‘over 55 properties’ to help you do that with like-minded people in land lease communities and retirement villages.
Note: We are not financial advisers. This article contains general information based on information from government websites as at 19 January 2023. Parameters can change and you should seek professional financial advice before acting on any of this information.
