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How to make downsizing your smartest financial move ever

How To
December 15, 2018

Moving into a luxury lifestyle community, with lots of like-minded neighbours and an array of leisure facilities, may sound like a dream to many Australians, but confusion around fees and finances often gets in the way.

When you’ve lived in the same home for many years, entering the property market again is daunting – and a series of negative headlines around exit fees and inflated management fees has made potential downsizers cautious. However, choosing the right community can lead to a better lifestyle and ongoing financial security.

Home owners Peter and Lyn Brennan sold their two-storey house south of Brisbane at MacGregor, where they had raised three daughters, to buy into the Halcyon Greens lifestyle community at Gainsborough Greens, Pimpama, on the Gold Coast.

“Eventually, the maintenance on the house where we had lived for 45 years got beyond us,” Mr Brennan said.

“And we were getting to the stage where if we didn’t move now, it would be too late. The longer you leave it, the harder it is to move.”

For over-50s looking to downsize into a lifestyle community, there are two main financial models - retirement village and land lease community. For the latter, no deferred management fees (commonly known as exit fees) are payable when the home is ultimately sold, and there is no stamp duty on the purchase.

Mr Brennan, a former banker and business owner, was determined that any move they did make was a smart financial choice.

The ability to sell their house and retain any capital gain appealed to the Brennans. The couple pays monthly site fees that cover maintenance, water usage and council rates, a financial model which they are comfortable with.

“There are so many operators that take a great deal of your capital when you leave. That doesn’t happen here. That got us interested straight away,” Mr Brennan said.

“I wasn’t going to be interested in anything where they took your capital at the end of it. It stacks up – I think you’ll get as much capital growth here as anywhere in time because it’s an ageing world we’ve got.”

While the couple had originally planned to stay in their family home for life, they’re now delighted to have downsized to Halcyon Greens.

“It’s the best decision we’ve ever made. I was always sceptical about going anywhere like this until we got the taste of Halcyon through our friends,” Mr Brennan said.