Retirement property options in South Africa

South Africa is undergoing a significant demographic shift, with an ageing population expected to reach approximately 16% of the population over 60 by 2050. As the country observes Older Persons Week from 26 September to 2 October and celebrates International Day of Older Persons on 1 October, we honour our senior citizens and shed light on matters that impact their lives.

One of the challenges facing older South Africans is finding suitable housing. Many older people want to downsize and move into a smaller, more manageable home. However, they may also need access to care and support services. Consequently, the demand for retirement developments equipped with essential amenities is on the rise across the country.

Choosing the right retirement property involves more than just financial and physical considerations; it encompasses psychological aspects tied to ageing. Safety, financial stability, healthcare, social engagement, and lifestyle references are all vital factors that should harmonise seamlessly. Choosing the right retirement property is a major decision that will affect your quality of life for many years to come.

Retirement villages offer a good solution for many older people, as they provide a combination of housing, care, and social opportunities. When choosing the right retirement property, it’s essential to consider various factors that may impact your future quality of life.

Personal considerations

Budget

Align your budget with ownership models and associated financial commitments. Account for property costs and monthly service fees, covering maintenance, meals, and care services.

Lifestyle

Reflect on your desired community environment. Retirement villages offer social and recreational activities, while retirement homes may focus on care services.

Health

Assess current and future medical care needs. Select a property that can accommodate changing healthcare requirements, with some offering on-site healthcare services.

Family

Consider proximity to relatives and estate planning goals, including inheritance. Being near family and friends may influence your choice of location.

Different ownership models

Understanding the retirement property landscape in South Africa is vital, as it can significantly impact your financial and living arrangements. Common ownership models include:

1. Full title ownership

In this model of ownership, you have complete ownership of a property and are responsible for its maintenance and upkeep. This includes the ownership of the land and any existing or buildable house on it. You have the freedom to make changes to the property and receive a title deed that confirms this ownership. Additionally, you can register a bond on the property, which offers financial flexibility.

2. Sectional title ownership

Sectional title schemes involve individual units and communal property. While you own everything within the four walls of your unit, external areas like hallways, gardens and parking are co-owned by the community. Your ownership extends to an indivisible portion of the common property, determined by your unit’s size.

3. Right of occupation

The concept of the right of occupation is a significant factor in retirement property, manifesting in various forms such as life rights, share block schemes, long lease agreements, or membership in retirement clubs. Each comes with its own set of rules and implications:

• Life rights

You pay a significant upfront fee for the right to occupy a unit for life, though you don’t own the property. Upon your passing, the right reverts to the developer for resale. This option often covers levies and upkeep in the agreement, with deductions from your estate’s profit if you can no longer afford monthly levies. This is a leasehold arrangement.

• Share block schemes

This is a type of cooperative ownership. Residents acquire rights of residence through shares in a holding company, with no property ownership. The share block company must establish and maintain a levy fund for maintenance and repairs of the property, but you do have a say in how it is managed.

• Retirement clubs

Membership fees grant certain occupation rights to members within the club’s framework. Retirement club right of occupation is a similar concept to life rights, but the holder has the right to occupy the unit for a specified period of time, typically 20-30 years. After the specified period has elapsed, the holder must vacate the unit and the developer may then resell it.

4. Mixed Schemes

Mixed schemes are becoming increasingly popular in South Africa. These mixed schemes may include various property types within a single village, each with its own ownership model, but often falling under a single homeowners’ association. The variety of ownership options can be helpful if you have specific needs or preferences. For example, you could choose a mixed scheme that includes both independent living units and assisted living units. This would give you the flexibility to move into assisted living if your needs change in the future.

The ideal ownership model depends on individual circumstances and preferences. It is important to carefully consider all your options before making a decision. Here are some additional tips for choosing a retirement property in South Africa:

• Get professional advice. A financial advisor or estate agent can help you understand the different options available and make the best decision for you.
• Visit different retirement villages. This will give you a chance to see the different facilities and amenities that are offered.
• Talk to residents. Get their feedback on the quality of care, the level of social interaction, and the overall experience.

As there’s no one-size-fits-all solution for retirement property, careful evaluation of each option is essential. Your retirement property represents your final nest egg and a significant part of your retirement journey. You can find the perfect place to spend your golden years by carefully considering your needs and preferences.