As a new generation of retirees emerge, the retirement living property market finds new ways of catering to the needs and lifestyles of those looking to settle down in comfort and security
One of the key trends emerging in striving to provide retirees with secure, community‑based property investments that carry all the benefits of homeownership is property off-plan developments. “Purchasing property off-plan for retirement purposes gives one freedom of choice,” says Gus van der Spek, director of AVIEW and retirement lifestyle estate Wytham Estate. “Retirees can choose the position of their home, the location, the size and even some of the finishes. Ultimately, you get to choose where you want to be and how you want to live.”
WHAT IS AN OFF-PLAN PROPERTY
Off-plan properties are homes within housing developments that are sold to buyers prior to construction. Purchasing a home that does not yet exist might scare away some buyers, but many retirees who have invested in off-plan properties are reaping the rewards
FINANCING
Most developers opt for life rights as their funding model of choice when developing a retirement lifestyle estate. “Simply put, life rights buys you the right to live in a home in a retirement facility and gives you the security of tenure for the rest of your life,” he explains.
“Once a buyer elects to purchase (or fund) a property, they will need to either put down a 10% deposit with bank guarantees or a 30% deposit without guarantees. Deposits are kept in an interest-bearing account and the interest is paid to the retiree (in full) upon transfer. It’s important to make sure that the deposit is kept with a credible conveyancing attorney,” says Van der Spek.
As the current state of the housing market remains a challenge, he adds that rather than having to sell their homes to release equity upfront, developers can take the retirees’ share portfolios into consideration as collateral. “This way, the seller has more time and can sell when they are ready to.”
REDUCED COST OF LIVING
Another financial benefit of purchasing property off-plan and through life rights is that retirees are far less likely to incur hidden costs or special levies. “The Housing Development Schemes for Retirement Persons Act (HDSRPA) requires developers of a life rights village to produce a transparent statement declaring how levies will be calculated, as well as a two-year projection of what levies will be. This is a big help to occupants, who can plan their finances accordingly,” he says.
Retirees in developments geared towards retirement living save on maintenance costs owing to the responsibility development managers take for upkeep. “The developers are committed to maintaining the condition of the unit, the facilities, and the village because the ongoing perceived value is directly related to the condition of the estate,” he adds.
OTHER COST SAVINGS
“Purchasing a property off‑plan and through life rights ensures that the retiree incurs no transfer costs or VAT expenses (15%), including bond registration. This offers a substantial cost savings, especially when buying a multi‑million-rand unit where transfer costs could amount to hundreds of thousands of rand on top of the purchase price.”
These transactions are governed by the HDSRP, which states that life right holders are entitled to the same rights they would have if they had entered into a registered long-term property lease. Retirees only pay in full once the development is completed and the developer only receives payment once the keys are handed over. “This ensures a transparent, mutually beneficial transaction,” says Van der Spek.
LIFESTYLE AND INDEPENDENCE
Modern retirement property developments boast entertainment and healthcare facilities that allow retirees to maintain their lifestyles while having access to medical facilities as they grow older. “Living in a modern village with extensive on-site facilities and access to healthcare is of major benefit to retirees and relieves a lot of stress that would be a part of living in a freehold property.”
FLEXIBILITY AND CUSTOMISATION
The off-plan purchase process allows buyers to make final decisions on design qualities and interior finishes. “Retirees are then able to relocate to a home that is truly theirs when they reach retirement age, giving them a unique living experience that is both secure and customised,” he concludes.
