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New lender for land lease loans launches

Seniors lifestyle communities developer Ingenia Communities has partnered with a fintech start-up to launch a funding solution for prospective residents of land lease communities.

Ingenia Communities Group, an Australian property group that owns, operates and develops a portfolio of seniors communities and holiday parks, has announced that it has partnered with a fintech start-up, Land Lease Home Loans, to launch a funding solution for prospective residents of land lease communities (communities where residents purchase the property/building but pay a fee to lease the land where the home is located, such as caravan parks or manufactured home estates).

The two companies have reportedly been working with one another for the past 18 months to build up the Land Lease Home Loans business offering, which aims to help support those wishing to buy a home in a land lease community but require a loan to do so.

Land Lease Home Loans is therefore providing borrowers with a principal and interest chattel loan (starting from 4.95 per cent for a five-year loan (6.73 per cent comparison) or an interest-only chattel loan (starting from 5.50 per cent for a five-year loan (7.28 per cent comparison) to do so.

The loans enable customers to borrow up to 40 per cent of the home’s purchase price, up to a maximum of $150,000.

It may be provided as a principal and interest loan over five or 10 years, and can come with or without a balloon payment of up to one-third of the loan, payable at the end of the term.

The company also offers a reverse mortgage option starting from 5.50 per cent per annum (5.66 per cent comparison) based on a $150,000 loan over a 25-year term.

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ASX-listed Ingenia is providing seed capital and holds a strategic minority stake in the Land Lease Home Loans business (and will participate in the oversight of governance, credit policies and lending framework as the business becomes established).

In addition, Ingenia has committed $3 million to fund a loan book to be used to exclusively offer amortising loans to customers purchasing a new home in an Ingenia Lifestyle community.

It is expected that Land Lease Home Loans will expand to offer similar products to other operators in near future.

Ingenia Communities Group CEO Simon Owen suggested that the new loan product was “the first ever funding solution for prospective residents to land lease communities”.

“After many years of effort, undertaking meetings with literally scores of financiers who may have seen the opportunity but were not prepared to commit to offering a realistic solution, this is a great outcome,” he said.

“We have seen the tremendous success of this market in the US where the provision of funding is commonplace and have been very keen to support the introduction of a well-thought-out and well-executed finance solution for prospective residents who may require a modest loan to facilitate their move to a community.

“This funding solution is a natural next step in the growth and maturity of the land lease sector in Australia. We have been working with Andrew Ralph, the founder of Land Lease Home Loans, who shares our vision, to bring this opportunity to market,” Mr Owen said.

Andrew Ralph, managing director of Land Lease Home Loans, said he was excited about the opportunity to work with Ingenia in “establishing the first dedicated provider of home loans for land lease residents”.

“This is an untapped area of housing finance demand, and we believe the potential market is significant,” he said.

“There is already a strong pipeline of inquiries ahead of the official market launch,” he added.

Kate Melrose, the general manager project sales for Ingenia Lifestyle, said the product may help those who “may be attracted to the connected and supportive lifestyle our communities offer but may be delaying their decision for financial reasons”.

“We are increasingly seeing interest from both younger buyers and single people, who are still working and would like to make a move to our communities,” she said.

“This product will open that opportunity for younger, aspirational buyers. With an increasing volume of downsize buyers still working and the trend for Baby Boomers wanting to take control and downsize earlier, Land Lease Home Loans will provide greater choice and control to more downsizers wishing to control the right time to move and increase access to affordable housing options for more people seeking security in later life.”

According to the Residential Land Lease Alliance (RLLA), there are approximately 900 land lease communities across Australia, which are home to around 70,000 residents. An estimated 2 per cent of older Australians live in a land lease community, according to the RLLA.

[Related: Early super access used to fund mortgages: ABS]

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