Types of Ownership

Single Title

Statistically most property investors at the retirement life stage are selling a property to downsize or move into more suitable and secure accommodation that offers appropriate facilities and, as such, they are therefore generally well acquainted with this purchase process.

Registration of a unit within a single title scheme occurs through the deeds offices and transfer duty and conveyance costs are therefore incurred, unless a unit is bought from a developer which result in significant cost savings as no transfer fees will be payable.

In a single title development all the traditional responsibilities and accountabilities of traditional home ownership would be applicable within the guidelines given in the Constitution and Management & Conduct Rules of the relevant village.   Importantly, the developer of a single title development carries no responsibility for the ongoing maintenance and cost management aspects once the development has been built and the proportionate responsibility become that of each owner of a unit in the village or estate.

Sectional Title

Sectional title is the option that most SA property investors are familiar with as it deals with purchasing the property through what could be termed relatively conventional channels.

Registration of a unit within a sectional title scheme occurs through the deeds offices and transfer duty and conveyance costs are therefore incurred, unless a unit is bought from a developer which result in significant cost savings as no transfer fees will be payable.

Importantly, the developer of a sectional title development carries no responsibility for the ongoing maintenance and cost management aspects once the development has been built.

The onus falls upon the owner or residents to do so.

Life Right Purchase or Life Right Rental

While the Life Rights Scheme is arguably the most popular of all purchase schemes internationally, it is a relative, and rather attractive, newcomer to the SA retirement landscape.

As a purchase option it is considered ideal for those who have less capital to invest, or simply prefer this scheme due to its other numerous benefits.  Life Rights offer precisely what the name implies; purchasers (a person) have a legal right to occupy the unit for the duration of their life.  Unlike sectional title developments, an advantage of life rights is that it is not a property transfer, there are no bond registration fees, transfer duties and no VAT payable (although a minimal legal fee may be applicable), thereby avoiding the negative effects that such costs have upon discretionary income and estate values.

Residents enjoy similar privileges to the homes being purchased by sectional or other titles; the developer, however, remains the sole owner of each unit and therefore carries the responsibility of maintenance and the upkeep of the village and its facilities.

As the asset is an investment for both the life right holder and the developer, the developer will protect and maintain this asset so as to ensure solid investment appreciation and returns for both parties.

Among the many benefits afforded by life rights, the freedom from the stress of managing and maintaining one’s home ranks paramount.  Upon successful resale, your estate receives one of the many options in the model

• the original purchase price only
• the original purchase price less selling and refurbishment costs
• the original purchase price along with a percentage of the net profit, which is determined and agreed at the time of purchase, less selling and refurbishment costs
• the selling price less selling and refurbishment costs

Share block schemes- not utilised often and therefore not discussed further.

Depending on the location and type of development, these types of ownership can be applicable individually or in conjunction with one another within the same development.

According to client feedback and research concluded over many years, Retirement Villages SA has found 2 distinct difference relating to the preferred type of ownership within developments in the greater Western Cape:

• Afrikaans speaking communities are generally very hesitant to invest in Life Right developments and prefer Single Title or Sectional Title ownership. They tend to move in at a much younger age (between the ages of 60 and 70) and use the units as a lock-up-and-go prior to the stage where the care services are required or utilised - this allows them to stay within a familiar environment amongst their friends during the later stages of their lives
• English speaking communities generally have no qualm about investing in Life Right developments and tend to move in at a much older age (mostly from the age of 75 or later). They therefore generally require the care facilities much quicker after moving in than their Afrikaans counterparts
• In the event where one or more of the ownership entities co-exist, a Master Home Owners Association or Body Corporate is founded with representation of all the entities to ensure the smooth running and management of the development

Whatever your preference may be, there is a Village or Estate to cater to your particular needs, and RetirementSA will gladly assist to make your dreams come true.