Cause 5: Limited incentives to sell pre-owned manufactured homes

Park owners receive site rent from home owners who are selling their home, even if the home owner no longer lives in the park, but derive no income from a new manufactured home that the park owner has built, until it is sold. This incentivises park owners to prioritise the sale of new homes over existing homes, particularly in slower markets where supply outstrips demand. This can contribute to delays in the sale of pre-owned homes, with the extent of the delays also influenced by market conditions.

When park owners act as selling agent for a home owner, they have a potential conflict of interest between their duty as an agent of the selling home owner and their financial interests as owner of the park. Selling home owners must initiate the assignment of their site agreement but are often guided by the park owner who has expertise and can effectively drive the sales process. Assignment is potentially beneficial to consumers when buying or selling, as favourable site rent terms (such as a low site rent) could increase the sale value of a manufactured home and lower the ongoing cost for a new home owner. However, these consumer advantages are inconsistent with the financial interest of the park owner. New site agreements may be used to increase the starting level of site rent and create upwards pressure on site rents across the park (see cause 2) which are normalised through market rent reviews (see cause 3).