Looking Ahead to Retirement

Private Property South Africa
Lea Jacobs

It’s pretty hard to admit that we are getting old and that for many the time is rapidly approaching when certain decisions regarding our future need to be addressed. However, it is advisable to start considering your options before they become urgent and finding the right property in which to retire is always going to rank as one of life’s important decisions.

It has been estimated that over 90 percent of South African retirees do not enjoy a financially carefree retirement. In addition 31 percent of pensioners believe that they haven’t saved enough for their capital to last for the rest of their lives, while 33 percent, currently have a monthly shortfall between their income and expenses.

The need to plan for retirement has become increasingly evident and those who look and plan ahead are undoubtedly going to enjoy their golden years far more than those who don’t. Finding the right property in the right environment for an older investor is an issue that most of us should be considering earlier rather than later. There is a shortage of retirement property in this country and many retirement villages have extensive waiting lists. Does this mean that a middle-aged person should consider investing in a property within a retirement complex well before they are ready to move?

As with any property buying decision, those looking to buy into a retirement scheme should consider all of the options before parting with their hard-earned cash. Location is always going to be important, however, it isn’t the only crucial factor.

It is absolutely vital that anyone who develops a retirement facility knows what they are doing. Building something that is not only suitable for ageing people, but also offers the right kind of services to those in need of such facilities is challenging. Just because a developer has been building residential complexes for decades does not mean that they have the expertise required in order to build property in this specialised field. It’s not the only area that investors need to investigate.

In a recent article that appeared in the Business Day HomeFront, Arthur Case, the general manager of Evergreen Lifestyles noted that there are various types of retirement schemes currently available in South Africa. Anyone considering this type of investment should look at a range of options that will best suit the type of lifestyle they have in mind. It also pays to look at purchase options and determine whether to opt for Life Rights, Sectional Title or Share Block models.

While most South Africans are au fait with sectional title and share block schemes, Life Rights is a relative newcomer to the South African retirement landscape. Although Life Rights developments were first launched in South Africa during the 1970s, the concept only really started to take off during the 1990s. One of the advantages of Life Rights is that unlike property bought under the sectional title banner, the property is not transferred, there are no bond registration fees or transfer duties and there is no VAT payable.

When buying a sectional title unit within a retirement village, however, the purchaser obtains ownership of a unit or residence by means of a title deed that is registered with the Deeds Registry.

Share block schemes operate differently. Owners do not obtain exclusive title to the unit they have ‘purchased’. Instead they obtain shares in the company that owns the residence and a right to occupy a certain part of the property. The purchaser is then issued with a share certificate.

Life Rights offer precisely what the name implies; purchasers have a legal right to occupy the unit for the duration of their lives. The development and all its facilities remain both an asset and the responsibility of the developer.

In all three types of schemes the buyer has the protection of the Housing Schemes for Retired Persons Act of 1988. Taking the time to do a little homework and opt for the retirement option most suited to your specific needs could well pave the way to a happy, fulfilled retirement.

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