A package of preferred options which delivers the greatest net benefit to the community has been identified for consultation purposes. The selection of the package involved consideration of the relative costs and benefits of each option for each stakeholder group, the extent to which options achieve identified policy objectives individually and in combination, and the extent to which the combination of options prevents any likely unintended consequences that might occur in other configurations.
The preferred package includes the following options:
- Option 2 – Require residential parks to publish a comparison document
- Option 3 – Simplify the sales and assignment process
- Option 4 – Limit site rent increases to a prescribed basis
- Option 6 – Prohibit market rent reviews
- Option 7 – Limit site rent increases to the higher of CPI or a fixed percentage (for example, 3.5%)
- Option 10 – Require maintenance and capital replacement plans
- Option 11 – Establish a limited buyback and site rent reduction scheme
The final package of recommended options may change following stakeholder feedback on the C-RIS.
Financial costs and benefits of reform package
The table below provides an estimate of the cumulative costs and benefits of the preferred package of options over 10 years. As the costs and benefits of options may overlap, or compound in ways which are difficult to predict, the total provided is speculative. More information on how these costs and benefits have been calculated can be found in the C-RIS.
Table 1. Financial costs and benefits of the preferred reform package
Benefit | Cost |
Savings from reduced sale times for home owners Option 2: $1,626,000 Option 3: $3,252,000 Option 11: $3,887,000 Total: $3,887,000 - $8,765,000 | Cost of park owners preparing residential park comparison document Option 2: $385,700 |
Reduced home owner site rent from carry over of beneficial terms Option 3: $3,661,000 | Reduced park owner profitability from carry over of beneficial terms Option 3: $3,661,000 |
Benefit of lower site rent increases for home owners Option 6: $3,508,024 Option 7: $53,429,904 Total: $53,429,904 – $56,937,928 to over 10 years | Reduced park owner profitability for lower site rent increases: Option 6: $3,508,024 Option 7: $53,429,904 Total: $53,429,904 – $56,937,928 over 10 years |
Reduced cost of market valuations for park owners Option 6: $4,360,500 | Cost of reduced site rent and buyback requirements for unsold homes Option 11: $5,749,000 |
Additional park owner revenue from sales commission Option 11: $957,000 | Cost of implementing maintenance and capital replacement plans Option 10: $14,250,600 |
Reduced disputes (assuming a cumulative 70% reduction in disputes across all options) - $7,300 for home owners over 10 years based on QCAT application fees
- $80,700 over 10 years for government
- Cost / time savings for park owners resolving formal and informal disputes: $8,925,000
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Total benefit to the community as a whole Reform package results in a total financial benefit across the market, ranging from $75,308,404 – $83,694,428 (mid-point $79,501,416) | Total cost to the community as a whole Reform package results in a total financial cost across the market ranging from $77,176,204 – $80,684,228 (mid-point $78,930,216) |
Other impacts of the preferred package of reform options
The C-RIS identifies a range of other important qualitative impacts (mostly benefits) of the preferred reform package which are difficult to quantify. These include:
- greater transparency of site agreements
- fairer site rent increases leading to improved affordability and increased spending in local communities
- improved amenity of residential parks
- improved housing security and a reduced burden on the social housing system
- improved health and wellbeing of home owners
- reduced burden on government
- increased capital gains for home owners and improved consumer satisfaction and confidence in the industry.
A further possible impact is an increase in the price of manufactured homes for prospective home owners because of improved consumer confidence and reduced supply.
Conclusion of impact analysis of preferred options
Based on the above assessment of the estimated costs and benefits to the community as a whole, the preferred package of options delivers a quantitative net benefit of $2,980,200 over 10 years in a best-case scenario[1], or a cost of $1,867,800 in a worst-case scenario. The midpoint would see a net benefit of $571,000 over 10 years. This is without consideration of the qualitative benefits, which are likely to outweigh the costs even in the highest cost scenario.
Most costs are due to lower growth in profitability for market participants. Park owner profitability is not anticipated to substantially decrease under the proposed package of options but will grow more slowly than under the status quo. Most of the quantitative benefits of this reform package are experienced by home owners who benefit from slower rates of increase in site rent compared to the status quo, as well as substantial non-financial benefits from improved transparency, predictability, fairness, reduced conflict, improved quality of life and greater housing security. A broader benefit of the package is improved consumer confidence in the residential park industry, which has the effect of driving demand and expanding the potential market and profitability of residential parks at rates which cannot be accurately predicted.
In the absence of such reforms, low consumer confidence and satisfaction measures and reputational issues could make residential parks less attractive than other options, affecting growth in the industry, and compounding barriers for home owners in exiting their park.
The quantifiable benefits to government though positive, are likely understated, as the package will have positive impacts on services that are funded by government such as the Queensland Retirement Village and Park Advice Service, home owner advocacy and support groups, and the education, enforcement and compliance activities of the department’s Regulatory Services Unit. These services will continue under the proposed package of options, and thus their costs have not been included, however the reduced burden on these services is likely to improve the quality of these services by freeing up resources for more proactive and educative work that reduces costs over the medium to long term.
The preferred package of reform options is expected to provide a net benefit to the community as a whole. Given the relatively high rates of profitability within the residential park industry, a redistribution of benefits to home owners is reasonable and appropriate, particularly as some benefits for park owners exist due to a lack of consumer protection in residential parks in comparison to other seniors housing such as retirement villages.
[1] Assuming costs and benefits on site rents and sales are linearly cumulative
A package of preferred options which delivers the greatest net benefit to the community has been identified for consultation purposes. The selection of the package involved consideration of the relative costs and benefits of each option for each stakeholder group, the extent to which options achieve identified policy objectives individually and in combination, and the extent to which the combination of options prevents any likely unintended consequences that might occur in other configurations.
The preferred package includes the following options:
- Option 2 – Require residential parks to publish a comparison document
- Option 3 – Simplify the sales and assignment process
- Option 4 – Limit site rent increases to a prescribed basis
- Option 6 – Prohibit market rent reviews
- Option 7 – Limit site rent increases to the higher of CPI or a fixed percentage (for example, 3.5%)
- Option 10 – Require maintenance and capital replacement plans
- Option 11 – Establish a limited buyback and site rent reduction scheme
The final package of recommended options may change following stakeholder feedback on the C-RIS.
Financial costs and benefits of reform package
The table below provides an estimate of the cumulative costs and benefits of the preferred package of options over 10 years. As the costs and benefits of options may overlap, or compound in ways which are difficult to predict, the total provided is speculative. More information on how these costs and benefits have been calculated can be found in the C-RIS.
Table 1. Financial costs and benefits of the preferred reform package
Benefit | Cost |
Savings from reduced sale times for home owners Option 2: $1,626,000 Option 3: $3,252,000 Option 11: $3,887,000 Total: $3,887,000 - $8,765,000 | Cost of park owners preparing residential park comparison document Option 2: $385,700 |
Reduced home owner site rent from carry over of beneficial terms Option 3: $3,661,000 | Reduced park owner profitability from carry over of beneficial terms Option 3: $3,661,000 |
Benefit of lower site rent increases for home owners Option 6: $3,508,024 Option 7: $53,429,904 Total: $53,429,904 – $56,937,928 to over 10 years | Reduced park owner profitability for lower site rent increases: Option 6: $3,508,024 Option 7: $53,429,904 Total: $53,429,904 – $56,937,928 over 10 years |
Reduced cost of market valuations for park owners Option 6: $4,360,500 | Cost of reduced site rent and buyback requirements for unsold homes Option 11: $5,749,000 |
Additional park owner revenue from sales commission Option 11: $957,000 | Cost of implementing maintenance and capital replacement plans Option 10: $14,250,600 |
Reduced disputes (assuming a cumulative 70% reduction in disputes across all options) - $7,300 for home owners over 10 years based on QCAT application fees
- $80,700 over 10 years for government
- Cost / time savings for park owners resolving formal and informal disputes: $8,925,000
| |
Total benefit to the community as a whole Reform package results in a total financial benefit across the market, ranging from $75,308,404 – $83,694,428 (mid-point $79,501,416) | Total cost to the community as a whole Reform package results in a total financial cost across the market ranging from $77,176,204 – $80,684,228 (mid-point $78,930,216) |
Other impacts of the preferred package of reform options
The C-RIS identifies a range of other important qualitative impacts (mostly benefits) of the preferred reform package which are difficult to quantify. These include:
- greater transparency of site agreements
- fairer site rent increases leading to improved affordability and increased spending in local communities
- improved amenity of residential parks
- improved housing security and a reduced burden on the social housing system
- improved health and wellbeing of home owners
- reduced burden on government
- increased capital gains for home owners and improved consumer satisfaction and confidence in the industry.
A further possible impact is an increase in the price of manufactured homes for prospective home owners because of improved consumer confidence and reduced supply.
Conclusion of impact analysis of preferred options
Based on the above assessment of the estimated costs and benefits to the community as a whole, the preferred package of options delivers a quantitative net benefit of $2,980,200 over 10 years in a best-case scenario[1], or a cost of $1,867,800 in a worst-case scenario. The midpoint would see a net benefit of $571,000 over 10 years. This is without consideration of the qualitative benefits, which are likely to outweigh the costs even in the highest cost scenario.
Most costs are due to lower growth in profitability for market participants. Park owner profitability is not anticipated to substantially decrease under the proposed package of options but will grow more slowly than under the status quo. Most of the quantitative benefits of this reform package are experienced by home owners who benefit from slower rates of increase in site rent compared to the status quo, as well as substantial non-financial benefits from improved transparency, predictability, fairness, reduced conflict, improved quality of life and greater housing security. A broader benefit of the package is improved consumer confidence in the residential park industry, which has the effect of driving demand and expanding the potential market and profitability of residential parks at rates which cannot be accurately predicted.
In the absence of such reforms, low consumer confidence and satisfaction measures and reputational issues could make residential parks less attractive than other options, affecting growth in the industry, and compounding barriers for home owners in exiting their park.
The quantifiable benefits to government though positive, are likely understated, as the package will have positive impacts on services that are funded by government such as the Queensland Retirement Village and Park Advice Service, home owner advocacy and support groups, and the education, enforcement and compliance activities of the department’s Regulatory Services Unit. These services will continue under the proposed package of options, and thus their costs have not been included, however the reduced burden on these services is likely to improve the quality of these services by freeing up resources for more proactive and educative work that reduces costs over the medium to long term.
The preferred package of reform options is expected to provide a net benefit to the community as a whole. Given the relatively high rates of profitability within the residential park industry, a redistribution of benefits to home owners is reasonable and appropriate, particularly as some benefits for park owners exist due to a lack of consumer protection in residential parks in comparison to other seniors housing such as retirement villages.
[1] Assuming costs and benefits on site rents and sales are linearly cumulative
