More and more South Africans are investing in retirement developments, and for good reason.
So says Adrian Goslett, CEO of RE/MAX of Souhthern African, who adds that “there is a strong demand in South Africa for secure lifestyle retirement developments”. “In fact, the demand often outstrips supply, with many of the top retirement villages boasting long waiting lists.”
He says it is understandable why: “Many people recognise the long-term value of these kinds of developments, investing long before retirement age and renting them out until the time comes for them to move in. This gives these investors the opportunity to plan for their old age and invest in these developments at today’s prices, ensuring that their capital investment holds its value, and often, even increases in value. In this way, they can rent out or sell their family homes for income during their golden years, and enjoy being part of a retirement community when it is most needed.”
Today’s retirement villages have made big shifts away from merely serving the aged, to meeting the luxuries demanded by a more privileged society, says Goslett: “When people decide to invest in a retirement village, they consciously or subconsciously have made the decision to invest in a certain lifestyle. The term ‘retirement village’ denotes far more than mere accommodation, and incorporates a number of lifestyle benefits as well.”
Retirement developments vary, and depending on the price, they offer a number of facilities, including central heating, air-conditioning, fully-fitted kitchens, satellite television and in some cases, even Wi-Fi Internet connection. There is also a wide range of communal facilities provided, including medical and dental clinics, nursing services, lounges, laundry and housekeeping services, spa and gym facilities, a restaurant, bar, meal delivery and handyman services, a mini-supermarket, and free local transport. Sports facilities are also common, and can include swimming pools, tennis courts, bowls, golf course, a video room, library and a social club.
Being in South Africa, as with all residential developments, security is a major concern, says Goslett: “Retirement developments are most often fully gated communities, with state-of-the-art security measures in place, including manned 24-hour security guards patrolling the perimeter and the entrance, CCTV surveillance, intercom systems, personal emergency alarm systems and panic buttons fitted in each unit.”
He notes that the right location of the retirement development is of crucial importance: “Apart from solid security, comprehensive health care and lifestyle facilities, and aesthetic considerations, retirees want to be proximate to various external amenities such as shopping centres, golf courses, cinemas, and a variety of other entertainment attractions.”
Goslett says that currently, the most popular locations for these developments are along South Africa’s coastal areas: “The Western and Eastern Cape are especially attractive to many retirees, due to the beauty of the ocean and pristine beaches, as well as the perceived laid-back lifestyle enjoyed by residents of these small seaside towns. These locations are incredibly attractive to those who are ready for an extended holiday in their later years.”
As their name implies, retirement developments are purpose-built communities for the elderly. The developments usually include a selection of various sized apartments, townhouses and villas. “A wide selection of residences caters for the varying ages and consequent needs of retired individuals,” says Goslett.
Many retirees prefer to buy a home where they can still do a bit of gardening and enjoy their independence, and later on, when assisted health care is required, they can move into a smaller apartment where care is provided or into a frail care facility within the same development.
Goslett also notes that the lock-up-and-go benefits of these communities are also very attractive to those individuals who like to travel. He says that there are four main legal structures on which retirement villages can be based including:
– Full Individual Title is normally available when the sites or plots are situated within a common property area which is managed by trustees and a levy is charged to offset service costs within the common area. The buyer will receive title deeds to the property, the property will be registered in their name and includes the area around the unit for exclusive use. Owners are personally responsible for the services, rates and taxes associated with the property.
– Sectional title is another type of ownership which places the rights of ownership squarely in the hands of the owner. A levy is also charged in order to finance the services provided.
– Share-block schemes are less common. The complex is registered in the name of a share block company and each unit allotted a certain number of shares in the company. You buy shares, which give you the right to use a unit and the complex’s facilities but you don’t own your dwelling. This type of ownership means that one has a right of occupation to a specific unit tied to the block of shares you own. Levies are payable to cover the expenditure as sanctioned by the board of directors.
– Life-right ownership: This type of ownership refers the right of tenancy to a person/persons for their lifetime and the ownership is retained by the administering authority. Often this type of ownership has a clause which ensures that the estate ultimately benefits by:
– The whole purchase price plus a portion the of capital growth.
– The whole purchase price without capital growth.
– Only a portion of the original purchase price.
– No part of the purchase price.
– A combination of the above.
With a life right ownership scheme, you buy the right to live in a specific unit. However, as the ownership of the property isn’t transferred but retained by the estate, no transfer duty is payable. Nor are there any registration fees, as there are no title deeds. One needs to bear in mind, however, that a life right property can’t be bequeathed to an heir, as the right terminates when you leave the village or die.
Goslett advises that different retirement villages have different legal structures, and each has different rights and responsibilities: “The choice of village and its particular legal structure has important implications in various matters, including issues pertaining to taxation, rights and responsibilities under legislation, up-front costs and ongoing charges. Therefore, it is absolutely critical that potential investors understand what they are buying into, even if it means getting a lawyer to check it over and explain it in detail before they sign any contracts.”
Goslett says that there will be a high demand for retirement properties for a long time to come, particularly with the current shortage of these kinds of homes in South Africa. “Those that invest in retirement schemes wisely now will be securing more than just another property; they will be buying into a solid asset class that guarantees investors financial returns,” Goslett concludes.