Pros and cons of moving into a Manufactured Home Estate

Key points:

• Manufactured Home Estates (MHEs) are an affordable option for older Australians

• You generally don’t need to pay a lot of fees or rates that you would normally pay in a retirement village

• A number of MHEs are located in areas that don’t allow permanent housing for example because they’re in bushfire or flood zones

Older people are looking at MHEs as an alternative to regular retirement villages because they tend to be cheaper and often have more relaxed rules.

MHEs have pros and cons that need to be considered before making the move, especially as there are some stark legislative differences between a MHE and a retirement village.

Here we’ve outlined some of the main ones to help you with your decision. To learn more about MHE’s as an alternative to retirement villages, read our article on the Aged Care Guide.

Pros:

• Affordability and Government assistance

A Manufactured Home Estate can be a really affordable housing option to an older retiree, especially if you don’t have a lot of retirement savings but would like to live the retirement village lifestyle.

Generally, if you own your home, even in a retirement community, you are not eligible to receive Commonwealth Rent Assistance, however, this does not apply if you own a mobile or relocatable home, so you can receive payments to go towards site or lease fees while owning your home in a MHE.

Other financial benefits from land lease communities are that you do not have to pay any land taxes or council rates, and you also avoid paying stamp duty on buying a relocatable home in most States and Territories.

• Easy to relocate

The great thing about relocatable homes is that you are not locked into a location and can move your home if you feel like a change.

MHEs provide two options for staying at the park, a site agreement for a fixed or unfixed period of time. If you decide on a fixed site agreement, you’re generally agreeing to stay for a certain number of years. For example, in New South Wales it’s legislated that an agreement for a MHE site should be for a minimum of three years.

If you want to move to a new location within this time frame, you either have to wait until the lease runs out before moving, or break your lease early if you want to move right away. There may be a cost involved if you choose to break your lease. If your site agreement is not for a fixed period, then you can up and leave whenever you choose.

In a fixed home, you would need to go through the process of selling your home if you wanted to move, whereas relocatable homes can be uninstalled and moved to wherever the sun takes you. However, keep in mind that some relocatable homes may not be easily “relocatable” after the first installation.

• Easy connection to services

A MHE is also required to provide you connection to the mains water supply, a main sewer, a stormwater drainage system, and electrical circuit connection to a separate electricity meter. This legislation may differ slightly from State to Territory.

When your manufactured home is being installed, it will be easily hooked up to all of the necessary facilities you require.

• No exit fees

When moving out of a regular retirement village exit fees are the standard, but depending on the State or Territory you live in, you may not have to pay exit fees when leaving a land lease community. If your MHE doesn’t charge exit fees but you choose to break the fixed site agreement/lease, then you will likely be charged an amount for that.

• Limited eviction

There are limited situations where a site operator can ask you to leave the MHE.

While your behaviour and site rules can result in an eviction from a MHE, outside of your own behaviour, there are not a lot of reasons otherwise where a site operator can ask you to leave, unless the land requires repairs, there are any upgrades to the site, or if the land has been compulsorily acquired. This legislation may differ between States or Territories.

• Downsizing and retirement planning

Some retirees move into the land lease community as a way to downsize going into retirement while looking for an easier house and land to manage.

Since you’re likely downsizing to a more financially affordable home, it allows you to place more of your last home’s equity into your retirement fund.

Additionally, some retirees also buy a removable house on a MHE as an investment to lease out and earn some extra income.

Cons:

• Location and insurance

While MHEs can have many benefits for retirees, there are some concerns that all potential buyers should consider before making the move.

A 2020 research study from Macquarie University in Sydney, found that some communities are being created in regional areas that are largely affected by catastrophic weather events, like bushfires or floods.

In areas where Council won’t allow permanent residential housing, they will allow non-permanent alternatives like MHEs. These sites are zoned similar to caravan parks, giving operators easier land development access.

This can be an issue for MHE homeowners when they are the only ones impacted by damage to their relocatable home. One target market of MHEs are lower-income older Australians who may not be able to afford insurance, which can cause problems especially when they are located in a flood or bushfire risk area.

Some insurance providers may not provide insurance if you live in a high-risk area or you will be required to pay higher fees for insurance, which may make it unaffordable.

• Far away from services and amenities

Usually, retirement villages are about location, location, location. But many MHEs are not located in areas that are close to community, retail, or public amenities.

If you don’t have a vehicle, it will make it difficult to get to shops or nearby towns and in many ways you’ll have to rely on others for help or when requiring extra support.

• Poor resale value

MHEs don’t hold their value like other real estate will and in regards to resale value, while buying in is affordable, if you live for an average of 20 years in your relocatable home, the resale value will likely be very low.

Pre-owned relocatable homes can be cheap for other people to purchase, but not so much if you are in the owner’s shoes.

So, if you get to the point of wanting to move into an aged care facility, you may find that the equity from selling your MHE doesn’t cover your aged care costs as well as selling a regular fixed home would.

• Differing legislation between States and Territories

If you have decided to move your removable home to another State or Territory, you will need to be aware of any rules and legislation changes that may affect you.

Each State and Territory has different types of legislation in place around MHE’s, and this may impact your way of life in a new location.

Be aware of these changes before locking in a new land lease and ask potential site operators for a run down of MHE rules and regulations.

What works best for you

Manufactured Home Estates can be a great option for living a retirement village-like life without having the massive price tag for entry.

But you do need to be mindful that there are added risks to moving into a MHE, so you need to think about the best financial, lifestyle and location decision for you that also keeps you feeling safe and comfortable.

What is your main reason for considering Manufactured Home Estates as an option for you? Tell us in the comments below.

Related content:

Manufactured Home Estates – an alternative to retirement villages?
Finding the right retirement village for you
Transitioning into your retirement life