Image: Dr Zak

Life in a manufactured home estate – a more permanent iteration of a caravan park where residents live in relocatable homes – is sold as an affordable way to retire among people in the same age bracket. But new research shows it may not be all it’s cracked up to be.

Increasing numbers of older Australians are being encouraged to live in Manufactured Home Estates* (MHEs) as a retirement alternative and their proliferation raises concerns as to their longer-term sustainability. 

MHEs have evolved from caravan parks and are similar to North American trailer parks. The business model is one where a resident owns a relocatable/manufactured home and rents an individual site in an estate from an operator.

On the surface, the business model appears to be one of win-win for both residents and operators. 

Residents find MHEs attractive as the relocatable homes are usually (but not always) cheaper than surrounding residential housing, rental is affordable on the age pension and the community provides age-appropriate living. 

Marketing of MHEs emphasises affordability, plus personal and property security and the social aspects of living in a community. 

Operators find MHEs attractive based on their financial performance, with lower levels of capital investment required to achieve rental returns. 

It’s a “capital lite” business model, as unlike other types of retirement, residents pay the costs of construction and maintenance of homes. Compared to conventional residential property and other types of investment property (offices, retail, industrial), the rental return is relatively higher.  

The downsides of relocatable housing

On closer examination, cracks start to appear. Residents purchase a relocatable home; they do not own the land on which it is located. In addition, unlike conventional housing, these relocatable homes have a much shorter lifespan. 

In North America, the median age for relocatable homes is around 20 years, with an estimated lifespan of 22 years. The majority of residents in MHEs are aged between 65 and 74 years, so it is realistic to predict that many may outlive the relocatable homes they purchased. 

Studies of North American relocatable homes show this higher depreciation coupled with greater maintenance expense leads many MHE owners to scrap older homes rather than renovate or recycle them.

Is it really more affordable?

Living in an MHE is marketed as being an affordable housing choice. The fortnightly/monthly rental is on the site and is cheaper when compared with surrounding permanent property. 

As most of the residents are retirees, rentals are set in relation to the age pension and government supplements (Commonwealth Rent Assistance).

Studies comparing MHE living with conventional residential have found that it is more expensive over the longer term (20 years) when all costs and expenses are taken into account.

Incoming residents to many MHEs cannot purchase a relocatable home elsewhere and transport this to a property. Instead, they are often required to purchase from the operator, where the operator receives a profit margin; purchase from a designated supplier, where the operator receives a sales commission; or they may purchase an in situ second-hand property from an outgoing resident, where the operator may receive a sales commission. 

Operators achieve additional investment returns from these sales; listed operator Ingenia stated in company reporting that the Internal Rate of Return from a recently commenced MHE was in excess of 25 per cent.  

The end result is highly homogenous MHEs where all the houses look the same, with the same colour scheme and design features. Such homogeneity is attractive in corporate brochures, but reduces the level of choice for residents.

Disposable housing makes it difficult to achieve capital growth. Capital appreciation from residential property stems from land and its scarcity component. Also, permanent houses can be extended and refurbished, which isn’t always possible in a relocatable home.

This lack of capital appreciation will likely create a problem in the future. Residential aged care policy settings require incoming residents to pay for their accommodation, which most do from the sale or rental from their existing home. 

Residents in MHEs that need to access residential aged care may find this difficult when older relocatable homes hold minimal value. There are supported or concessional places in residential aged care for those with insufficient assets but these are limited. Operators argue that the communal setting of MHEs assists in the delivery of home care services, however, as many are in nonurban locations, delivery of such services can be problematic.

Older Australians looking for affordable housing that is appropriate for their needs face limited choices. On the surface, MHEs appear to be an attractive alternative. 

Their proliferation is funnelling large numbers of older Australians into disposable housing, whereby corporate operators make significant profits.

In the future, having low value assets reduces the choices available to residents needing to access residential aged care. 

The trade-off is between a short-term profit to operators with a long-term cost to residents and the wider community.

*Also called Residential Parks, Land Lease Communities (LLCs) and Relocatable Home Parks.

Associate professor Kristian Ruming is the Discipline Chair in Geography and Planning at Macquarie University. He is an urban and economic geographer and has published extensively on housing and urban planning issues.

Dr Lois C Towart is in the School of Built Environment at the University of Technology Sydney. She has over 25 years of property industry experience with a specialisation in retirement living and aged care.  This article stems from her PhD thesis – Supply and location drivers of Australian retirement communities

4 replies on “Retirement housing on wheels: Is it as affordable as it says in the marketing brochure?”

  1. Houses are grossly oversized and shabbily built with no thought to energy consumption.
    Houses need to be terrace style under 100sqm making use of common walls built on lots similar to Glebe and Newtown at the turn of the 20th century 200sqm, preferably north facing. Full double glazed windows, aerated concrete block masonry exteriors, high standards of insulation, roof mounted hot water heating and solar panels. “luxuries” ended, no ensuites, media theatres or billiard rooms.
    Public transit should be the only form of transport allowed in all new housing, with no garaging, no car capable “roads”, new housing built within 1000m of a metro station/small shopping mall.

  2. This is an important issue for older Australians who don’t want to buy into a retirement village, and of course, no-one chooses to go to the end of life option of institutional living in aged care facilities. Almost all want to stay put. It’s time for governments to bite the bullet and mandate the Livable Housing Design Guideline’s universal design features in all new homes. That is, tweak the existing housing code in the NCC. These features are good for everyone and no, it’s not all about grab rails and hospital design. And no, it costs very little, if any, if they are designed in at the concept stage. We just need a new cookie cutter for the designs.

  3. AFAIK the main drama is retired low-income pensioners who thought they were set up for life beside a beach somewhere in a low-cost home in a caravan park

    then being told the caravan park owner has sold to developers who then give 30 days notice to evict the old folks

    so the seaside retirement dream turns into a nightmare.

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