going up! land lease goes vertical.

Article by caroline egan from the source

Simon Chappel, developer of Best Life Angas Street, says vertical and lease is the “logical progression” for over 50s affordable housing.

In an Australian first, South Australia’s State Commission Assessment Panel has approved a vertical land lease village – Best Life Angas Street – that will provide affordable housing
for the Over 50s in the heart of Adelaide’s CBD.

Simon Chappel is a director of the developer, Prime Space Projects. With more than 20 years as a commercial office-pace developer and owner and operator of a retirement village, Simon believes the affordability proposition at the heart of vertical land lease makes it a logical progression for retirement villages and land lease. He expects other similar developments will “spring up” in the future.

how does vertical land lease work?

Simon explains that, in a vertical land lease development, the purchaser owns the fit-out while the developer owns the building and the airspace – this space is what the purchaser leases.

“Best Life will own the building and the purchaser of each apartment will pay considerably less than the market rate for any equivalent apartment plus a modest weekly rental.”

affordable

Under land lease, you occupy the land under a secure site lease. You pay a modest rental and own the apartment on the site outright.

“This provides an opportunity for people in their 50s, empty-nesters, single women, divorcees and downsizers, to afford to buy a home they can own in perpetuity, leave to their children, sell at any time they choose, with no exist fees,” Simon said.

“People are also looking for the security of homeownership at a reasonable price. Downsizers can put up to $300,000 each into their superannuation tax-free and purchase an affordable Best Life property with the remaining proceeds.”

Rental Assistance

Simon is a director of Best Life Communities, which owns and operates on Staten borough Retirement Village in Lea brook, South Australia. The luxury village was voted best in Australia in 2012.

“We have determined that vertical Land Lease is a logical step in progressing the retirement offering,” Simon said.

“Separating the ownership of land from the dwelling reduces entry costs and, as we know, Land Lease home ownership is free from ‘Exit Fees’ (Deferred Management Fees). In addition, there is the benefit of access to Commonwealth Rent Assistance for eligible retirees and other cost-of-living concessions offered by the state government to occupants of residential parks.”

The apartments will be situated between storeys four and 17. The building will contain three levels of parking, and a community centre, gym, library and activities room.

When completed in an estimated two years, Best Life Angas Street will be 18 storeys and contain 155 apartments. The apartments will be located on a site spanning around 2,000 square meters on Angas and Gunson Streets in the centre of the Adelaide CBD. Simon acquired the site in April 2021 for $6.75 million.

Adelaide’s new Calvary Emergency Hospital is only 65 steps away – to be precise – meaning care is always nearby. Opposite the building is a 24-jour convenience store selling groceries and takeaway food. Adelaide’s famous Central Market, Rundle Mall, Rundle Street, and a myriad of restaurants and other amenities are also close by.

The target market is Over 50s, as prescribed under the South Australian Residential Parks Act.

“Obvious Demand”

“Best Life has identified a paucity of product suitable for retirees who want an affordable apartment lifestyle,” Simon said.

“The luxury market is well catered for, but this is not so for those of more modest means With an ageing population that wants to age in a place in a community setting, we have identified an obvious demand for this product, which is close to all the amenities and convenience of the CBD.”

With interest rates rising, escalating electricity prices and increases in the cost of living, the market for this more affordable offering only likely to grow.

Attractive price packaging

Today, a new two-bedroom, two-bathroom apartment in the Adelaide CBD will generally sell for around $850,000. Simon believes that on completion, which is expected in about two years’ time, Best Life Angas Street’s two-bedroom, two-bathroom 129 sqm apartments will sell for 20% to 30% less than a similarly-located, equivalent strata-titled apartment.

“The apartments will be attractively prices when compared to equivalent new and existing stock. This is enhanced by access to Commonwealth Rental Assistance for eligible pensioners,” Simon said.

Land Lease properties are also exempt from stamp duty or transfer registration fees as there is no transfer of land. And as a principal of residence, land lease homes do not attract capital gains tax.

“Modest” weekly site fees cover statutory rates and taxes and water and maintenance/ operation of common facilities. Residents are responsible only for their utility consumption.

Simon also expects that enticing residents to downsize from the family home earlier will help them age in place longer because the dwellings are designed specifically for the over 50s.

“The importance of community and security, as available in developments such as these, shouldn’t be underestimated in considering health and quality of life outcomes,” said Simon.