• Although you pay levies, you will not be expected to pay
special levies for any unexpected expenses, as you may be
if you had bought a sectional title unit.
• Because you are buying a right, not the actual property,
it is likely you will pay less than you would for a freehold
or sectional title property of the same size and value. So,
if you have sold a house that you’ve been living in for
decades in order to buy a life right, chances are you will
have some left over to invest.
• Because the termination capital that is returned to the
exiting life right holders or their estate is pre-set at the time
The bad
of purchase, there is some flexibility in the purchase price.
But the life right model is not perfect, and – Some developers may let you choose a lower purchase
depending on how you look at it, and who you price for the life right, and then reduce the return capital
ask for advice – it could be considered a bad on termination – for example, 80% of it when you resell.
decision, and certainly – from a purely But you will be dead, of course, and you will have had the
financial perspective – it’s not considered
advantage of that extra cash while you were alive.
• If your finances change – for example if an investment fails,
an investment. Here’s why.
challenging or you live so long your pension starts looking like pocket
aspect of life right is that you can’t take money – some life right developers will give you access to
advantage of the increased value of the the capital tied up in your life right for paying levies and/
property. When you move out of your or for healthcare, and then offset it by a reduction in the
life right home, which will usually be feet terminal capital.
The
most
financially
first, all you will get back is your purchase • Most life right purchases are in dedicated retirement
price. This is the most common formula, but villages that may provide some meals, and will usually
there are variations. The property will then allow greater or lesser access to nursing care, frail care
be sold again t o a new resident at a market- and/or dementia care. And you won’t be bothered by
related price that might be double what you paid
crying babies and kids riding around on bikes.
(and what you get back). Now clearly, that is not a good • Hmm. If you think the previous point should go under Bad
return on investment from a purely financial perspective. or Ugly, then be reassured. You can buy life right in some
So, yes, it is a disadvantage. And, of course, you will still have genuine multigenerational estates where you may hear
to pay levies. peals of childish laughter throughout the day – and some
The good
Clearly there must be some advantages, or no-one would buy
in to it. Yes, there are – and they are significant.
• Unlike sectional title schemes, the life right developer is
crying babies, perhaps. And you’ll still be able to access
all the things we prefer not to think about, like in-home
nursing, frail care and such-like.
The practical
committed for life and does not disappear when the last Life right is not necessarily the right choice for everyone, but
unit is sold. In order to sell life rights in the future they it should certainly be considered. And when you do consider
must deliver an excellent ‘lived experience’ for their it, you need to weigh up all the pros and cons – financial,
existing residents. Reputation is everything. practical and emotional. Making decisions based on the fact
• When you buy a life right, you have a home for the rest that you are going to die seems morbid, but it’s important
of your life – or that of your spouse, whichever is longer. to think these things through while you are still fit, healthy
You don’t own the property, but your right to occupy it is and flexible enough to think clearly, and to settle in to a new
protected by law. environment without too much stress and trauma. And, of
• Because you don’t own the property, you are not course, the younger you are when you buy a life right, the
responsible for maintenance, gardening services, property longer you are likely to get to enjoy it, so you end up with a
insurance and other expenses. bit of a financial advantage, too.
Jennifer Stern
www.estate-living.co.za | 35