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In recent years, the choices and options for purchasing in a retirement development have increased with many new estates and complexes coming on board, each offering very different options for retirees. It can be overwhelming, especially under the current economic circumstances, to figure out what suits you best and which is right for your pocket and your future.
Rob Jones of Shire Properties, an experienced consultant on retirement living and associated services, including care, highlights that the economy and generally poor state of services being provided by local authorities in many areas is driving people toward estates that offer independence as well as social interaction, backed up by good service infrastructure, often independent of public services and utilities.
‘Suburban life is under pressure and it makes sense to share the cost of expensive utility solutions within an estate context. Most good estates offer security, catering, laundry, gardens, care, and information infrastructure and services. Many are already developing or considering establishing their own water, electricity, and even sewerage infrastructure,’ he says
For retirees, looking to purchase in a retirement scheme, the choices are essentially buying a sectional title property, buying into a share block scheme or investing in a life rights property. Each has its own legal and financial implications and understanding these differences must be a vital part of the decision-making process.
Sectional title
Purchasing a sectional title home in a retirement estate or complex, means that the buyer will own their house, apartment, or unit outright. Finance can be obtained for the purchase, the ownership is registered in the Deeds Office, and bond, conveyancing, and transfer costs are payable. Levies are also payable monthly once the deed is registered. The body corporate manages the estate, but residents are responsible for the maintenance and upkeep of their homes.
Share block
When buying in a share block, the buyer is buying shares in the company that owns the property. The buyer does not own the property but enters into a use and occupation agreement. Finance can be obtained for this transaction and a transfer duty fee will be due to SARS. As with the sectional title, a levy is payable which will cover the maintenance of the property. The buyer does not have a say in how the property is managed though and is not responsible for the share block company’s debt. The shares can increase in value over time and can be left to the family in the buyer’s last will and testament.
Life rights
Purchasing a property in a life rights scheme means that the retiree is buying the right to live in the home for the rest of their life. There is no ownership of property involved and therefore no transfer, bond, or conveyancing costs. For this reason, finance cannot be obtained for a life rights purchase. Levies are payable to the developer and the developer is responsible for maintenance and upkeep. Life rights cannot be bequeathed – the developer sells the unit upon the owner’s passing.
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Current trends in the retirement home sector
Whichever route you choose to go, there are many forward-thinking estates that are prioritising ways to best serve this sector of the market.
According to Jones, there is currently more focus on multi-generational estates that offer accommodation either to people of any age anywhere in the estate or in specified areas of the estate, while offering all services required by those wishing to grow older within the estate and not have to consider a move elsewhere for service reasons.
‘Secondly, more emphasis is being placed on offering Home Care services, to lower the total lifecycle care costs, with much smaller Care Centres being built that can cater to the frailest people as well as those who are living with some form of dementia. Both are challenging to accomplish well.’
Future trends shaping the retirement sector
Looking into the future, he says there is a growing number of efforts to build bridges between entities and communities within South Africa for the specific purpose of addressing challenges in various areas of the so-called “retirement” sector.
‘Project Scaffold is an example of a free-to-join project for anyone active in the care industry to join and share best practices, focus on cost savings, and improve the careers of care workers. Some 40 members have joined in the last year alone. I expect more such projects to be launched in the months ahead – possibly under the auspices of or supported by the Association for Senior Communities (ASC).’
