Before you buy a retirement home, read this

Retirement property purchase options include outright ownership or life rights. Picture: A Koolshooter/Pexels

Retirement property purchase options include outright ownership or life rights. Picture: A Koolshooter/Pexels

Published Jan 22, 2023


Today’s retirees are remaining active until well into their golden years, and as such, are demanding more from retirement accommodation.

Healthcare offerings that suit independent residents through to those in frail care, as well as lifestyle and sporting facilities, are therefore among the priorities for retirement property developers.

Such accommodation in the coastal areas of the Western Cape and KZN are particularly sought after.

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For those wishing to retire, or more often semi-retire, Jonathan Acutt, managing director of Acutts Real Estate, says the idea of moving to the coast as a lifestyle choice has become more predominant, especially as younger families seek opportunities overseas.

“People looking to retire no longer feel the need to remain in the town where their family grew up, and are rather looking to the coastline for a more laidback lifestyle.”

Acutt says there are three major considerations for those looking to semigrate to the coast:

1. Safety

Picture: Max Vakhtbovych/Pexels

“I believe that safety and security are high on the priority list. This is why community scheme living, especially for retirees or semi-retirees, is becoming more popular. These come with safety features such as 24-hour security, perimeter fencing, CCTV cameras, and access control for complete peace of mind.”

2. Social activities

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Further to this, Acutt says there needs to be a strong focus on social activities and interactions with neighbours and communities. The social distancing during the pandemic highlighted the value of social interaction and community engagements.

“That’s why it’s worth considering the availability of a community centre and social or sporting activities such as game nights, organised hikes, environmental groups, and markets. Estates that emphasise sustainable communities – where the communities are putting more in than they’re taking out, is important.”

3. Self-sustainability and sustainability

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In a world where the supply of basic services, such as electricity and water, is an issue, he also sees a great emphasis on communities that are sustainable and self-providing.

“Retirees should look for elements like solar power, water storage and designs that maximise natural lighting and breezes. Beyond this, sustainable living, in itself, is a must. Living within a natural environment, supporting the natural environment, is a simply a better, healthier way to live.”

Echoing this, Reece Daniel, developer of Serenity Hills in Margate, says people are now looking for retirement homes where they can enjoy active, outdoor lifestyles. This has negated a need for priority shifts.

In addition to the above, Serenity Hills gives the following guidelines for those starting the hunt for a retirement home:

Natural spaces

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The mental and physical benefits of the natural world are well-documented, and connecting with nature in retirement is becoming increasingly important. Nature reserves for hiking and bird watching, dams and lakes for fishing, and the seaside for relaxing and bathing. These make for happy, healthy living.

Pet-friendly accommodation

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There are documented health benefits for senior citizens living with pets, including decreased blood pressure, anxiety, and depression, as well as improved cognitive function. Despite this, many retirement villages have regulations preventing pet ownership. It is well worth considering pet-friendly estates, even if there isn’t a pet in the house now. It is always good to have the option.

Value for money

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Even those who’ve put away a significant amount of money for retirement will still need to spend carefully because of extended life expectancies and the rising cost of living. That’s why it’s important to consider locations, such as the KZN South Coast, where property prices and cost of living are substantially lower than in other coastal towns.


Picture: CDC/Unsplash

While it’s not something people want to dwell on, diminishing health in later years needs to be addressed. That’s why frail care, dementia, and step-down facilities are all important factors when choosing a retirement home. Where these are accommodated on-site, there’s no need for relocation in the future.

Children’s facilities

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An often-overlooked factor in retirement living is the offering of facilities for the younger generations. Even if grandchildren aren’t around just yet, they’re likely to be in the future and their needs should be considered. Estates with fishing dams, jungle gyms, swimming pools, and those near the ocean will encourage more family visits in future.


Picture: Kampus Production/Pexels

The importance of socialising and community engagement for mental well-being was highlighted during the forced isolation of the pandemic. Those residing in lifestyle estates benefit from ongoing community engagement through social clubs, sports classes, and volunteer programmes all enhance day-to-day life.

For many retirees, however, the idea of moving in to a retirement village can be daunting, especially if they would rather not label themselves as in-need of specialised elderly living. Weighing up the pros and cons is hugely personal, and circumstances vary from person to person, experts say.

You might, for example, be a single older person with no children, or married and with adult children who have left the nest, or married, you may be looking after grandchildren or still supporting your adult children. and now looking after grandchildren, or still supporting adult

Whatever the case, many people get to a point where they’re quietly thinking about whether or not they should, or could, move into a retirement village. And one of the most important things to wrap your head around is the sort of property contract you should enter into.

There are three possibilities offered in retirement villages – life rights, freehold and sectional title.

Life rights essentially means that once you pass away and your unit is resold, your estate gets back the amount you paid for the property, minus some costs, but not any profit made on the sale. However, it does come with other benefits.

Furthermore, most retirement complexes no longer offer outright ownership, says Jason Appel, financial planner at Chartered Wealth Solutions.

“Internationally, it’s mostly life rights, but we’re still getting used to it here.”

Life rights options are more budget friendly than ownership.

“I did an exercise for my parents, comparing ownership versus life rights, and I was taken by surprise. You can generally get a life rights unit at a lower cost than outright ownership. You do pay levies, but these cover all external maintenance, security, perhaps a meal a day. And the fact that there’s a maintenance team on the property to respond quickly to any problems.”

Levies also cover care of the garden, a swimming pool – if there is one, and all communal areas.

In the example he looked at for his parents, Appel says buying a life rights property was R500 000 less than buying it outright.

“The saving of R500 000 on capital outlay should of course be invested. If it was placed ‘in a diversified investment strategy (targeting a return of 10% per annum), it could create an additional R2 000 of income per month while still experiencing growth.”

If this extra income is not needed on a monthly basis, it will just compound in the investment portfolio.

He adds that the saving on monthly levies/rates and taxes would, of course, also result in needing less monthly income out of your current investments.

“A reduction in expense of R3 000pm would add five to six years on to the longevity of the client’s assets. The best way to improve the longevity of a retired person’s plan is to reduce their expenses, and a little goes a long way.”

If you go for life rights, however, you forgo the capital appreciation in the property’s value.

“This growth is hard to estimate as residential property valuations vary quite drastically. I would suggest that people consult their financial planners before making the decision.”

One of the main benefits of life rights, he explains, is that if you live to a really old age, and you run out of money, the village will not throw you out. Rather, the cost of your continued care is deducted from the capital amount you paid upfront.

“For example, if you paid R1.5-million for a flat, and the village cares for you for an extra few years after your money runs out, after selling the unit your estate will get the R1.5-million minus the care costs. There may well be other deductions too, such as a sales commission and/or or an amount to refurbish the unit for the next purchaser.”

Appel says people sometimes avoid life rights because the feeling is that their heirs will lose out on that initial investment. However, personally, he would rather know his parents were being well cared for and that there was no risk of him having to put in extra money down the line.

“It really helps me knowing that’s taken care of.”

From a purely numbers point of view, it’s better to invest in a retirement village earlier rather than later.

“A person buying in at 50 or 72 gets the same value over time, so the younger person will ultimately get a better deal. However, most people are not ready to even talk about it in their 50s.”

An added consideration though, is that most places have a waiting list.

“You’ll pay a small amount to be placed on it, but if you get the call before you’re ready, you can decline and you’ll be pushed down a spot on the list. But some places have a maximum age restriction as well, or some will say you’re restricted to a smaller unit if you’re at advanced age.

“So it is better to move in before your age becomes a problem, but only you will know at what point you are ready. And then again, the older you are, the more difficult change is.

The three contracts explained


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Rob Jones, managing director of Shire Retirement Properties, says this option means you own the land and building. It is your responsibility and you pay rates and taxes as there is a registered title deed in your name.

“You can leave it to your heirs and any gains in value would be for you. There may be some exit levy to pay to the complex, but it differs from place to place.”

Sectional title

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Here, you own a portion of the building, for example, an apartment or townhouse.

“You will have a title deed and you can leave it to your estate. You are responsible for internal maintenance, while the body corporate takes responsibility for outside maintenance as a general rule. You pay for that in your levies of course.

“There may be some exit levy to pay to the complex, but it differs from place to place,” Jones says.

Life rights

Picture: Max Vakhtbovych/Pexels

Echoing Appel, he says this is essentially a lease for the rest of your life.

“You’re paying upfront for the occupation of the building for you and your spouse for the remainder of your lives.”

Details differ from village to village, but usually it means that if you pass away and your unit is sold, your estate will get back the amount you paid, but not any portion of the increase in value (gain).

“In some estates a share of the profit will be paid to your estate, in others you will get back a bit less than you originally paid,” Jones says.

He adds: “Life rights can be a bit cheaper as a capital investment because the developer knows he can make profit over and over again, as he resells the unit over the years. In essence, the life rights village owner wants to look after the building because he wants to resell it.”

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