A PLACE TO RETIRE
Category Property Ownership
Finding the right place to retire can be daunting as one is faced with many questions regarding the best location, the available amenities, on-site health care facilities, etc. The most unnerving though is the fear of the unknown and venturing into a 'New World' with a myriad of pitfalls.
The best antidote is research. Arm yourself with the knowledge of the different types of retirement schemes, their pros and cons, and decide which type would suit your lifestyle and pocket best. Keep in mind too that this sector in South Africa is heavily regulated by about 20 statutes, regulations, municipal by-laws, and charters applicable to the elderly. For the most part, one can buy into a retirement village from the age of 50. Interestingly, the Older Persons Act 13 of 2006 sets the threshold of 65 years for males and 60 for females.
There are essentially four types of retirement property options - all of which are governed by the Housing Development Schemes for Retired Persons Act 65 of 1988, the main purpose being the regulation of the Retirement Village industry.
- Life Rights (or "housing interests" as described in the Act). An endorsement to the title deed essentially gives you (and your spouse) the right to live in the property for the rest of your life. Because you don't take ownership of the property, the costs are minimal to make the transition. Upon death or loss of the ability to be self-sufficient, the 'purchase price' is either retained by the Scheme or in some cases, the original price without any escalation might become part of the deceased's estate.
- Freehold. These are free-standing houses in a retirement estate and they come with all the usual costs of transfer and monthly upkeep. It is your property to do with as you please, whilst acting within the parameters of the estate rules. This is your most expensive option, whereas Life Rights is the most affordable option.
- Sectional Title. The units can comprise of flats or townhouses and the scheme is also governed by the Sectional Titles Act. The normal costs of transfer apply, so does monthly levy charges. As with Freehold, you are able to sell it at any time, and you are entitled to all the proceeds.
- Share Block Schemes. The number of these types of Schemes has been declining with the advent of Sectional Title in 1986. You don't own the property, but have a Use Agreement to live in a specified part of the property. The property belongs to a Share Block company, and you are issued with a share certificate. This means that should you wish to sell your shares you would need to find a cash buyer.
Before setting out to finding the perfect spot to retire make a checklist of what is important to you, your needs, your desires. One can very easily be side-tracked by glossy brochures and smooth-talking developers. Once you have found THE Place, start digging for more information, read and re-read the contract and conditions, and ask the help of your attorney or trusted estate agent, so that you can rest assured that when you step through the doors of your new place that "you're home".
Author: Adrie Barnard
