Real Estate Investor Magazine South Africa Real Estate Investor Magazine - Dec/Jan 2018 | Page 37
RETIREMENT
CASE STUDY
In response to the widening gap between demand and supply, one of the Winelands’ most sought-after
lifestyle estates has taken the initiative by developing a retirement facility within the existing development.
Val de Vie Manor recently launched Evergreen at Val de Vie, a lifestyle retirement village offered on the life
rights model where residents will not only enjoy top class retirement facilities including frail care, they also
have access to all the other amenities available on this exclusive multi award-winning estate.
transaction they choose as these vary greatly and can have
far-reaching consequences, both in the short and long-term.
As retirees will have to support themselves for an un-
known period with only their accumulated capital, this deci-
sion can seriously impact their quality of life.
Geffen explains the key differences: “In freehold and
sectional title developments, investors own their homes al-
though with sectional title, they are usually required to cede a
The four main options are: share
block, freehold, sectional title and
life rights, the fastest growing
scheme in the retirement sector.
“
“
percentage of their profit to the development if or when they
decide to sell. It’s therefore advisable to have an accountant
check the financials and the annual report for things like the
level of unrecovered debt, whether any loans have been taken
out and the level of reserves.
“However, with share block and life rights schemes you to
not own the property. In the former, you are a shareholder
in a company that owns or has a registered long lease over
a property and through a use agreement, the company gives
you the right to live in part of the property. You can bequeath
or sell your shareholding, but there may be stipulations in the
agreement as to who can occupy the property or buy your
interest,”
There is still much uncertainty surrounding the newest
scheme option, life rights and, whilst it has distinct advan-
tages it also has its drawbacks and may not suit all investor’s
long term financial needs.
“Essentially it affords the retired individual the right to
occupy a unit in a complex for the remainder of their life
while ownership of the property is retained by the develop-
ment.
“This 'right' is paid for with a capital investment and on
relocation or death the unit is ceded back to the develop-
ment, usually for the initial invested price, and this payment
becomes part of the deceased estate.
“Retirees who have less capital to invest will benefit from
the lower cost investment which affords them a lot more
house for their money than any other form of purchase and
tight monthly budgets will also be eased by lower levies as all
maintenance costs are covered by the development.”
Geffen concludes: “When choosing retirement property,
it is essential to do one’s homework and investors should
always compare a number of developments, their facilities
and their costs and levies. Request and read all the relevant
information about each place, ask questions, talk to residents
and staff and always check the developer’s track record and
reputation.
“And, most importantly, they must ensure that they un-
derstand the financial implications of the various ownership
schemes, analysing and comp aring pros and cons before
making a decision.”
SA Real Estate Investor Magazine DECEMBER 2017/JANUARY 2018
35