The pandemic not only changed our lives overnight, it also introduced new levels of uncertainty about our health, future, and financial security. In an increasingly subdued economy, comfortable retirement is becoming the biggest uncertainty for many people.
With the cost of living skyrocketing and savings dwindling, purchasing quality retirement accommodation in a secure community with the necessary amenities may no longer seem a viable option, especially as most retirees will have to support themselves for an unknown period with only their accumulated capita.
Perhaps one of the most important decisions that these investors now have to make is the type of sale transaction they choose as these vary greatly and can have far-reaching consequences, both in the short and long term.
While most people are familiar with the traditional ownership options like freehold and sectional title investments, Life Rights, the fastest growing scheme on the South African retirement landscape, and an extremely popular retirement model in the rest of the world, offers unique advantages but is often completely misunderstood.
Lisa Stredder, Retirement Property Specialist for the group in the Winelands, explains: "Life Rights is the ideal option for those who would prefer to leave the challenges and costs associated with house ownership, maintenance and sale to others while still maintaining their lifestyle.
"Essentially, it affords the retired individual the right to occupy a unit in a lifestyle estate for the remainder of their life while the developer retains ownership of the property.
"This 'right' is paid for with capital investment. On relocation or death, the unit is ceded back to the development, usually for the initial invested price, and this payment becomes part of the deceased estate.
"With this, comes a list of continuous services and an ongoing relationship, a partnership for life, as the developer doesn't bow out upon completion as happens with freehold and sectional title retirement schemes.
"So at the end of the day, retirees who have less capital to invest will benefit from the lower cost investment which affords them a lot more house and services 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."
"The mere fact that the developer maintains ownership and therefore a vested interest in the property's upkeep guarantees the maintenance of the exterior of the houses, communal grounds, health facilities, and all other amenities on the premises which is a huge benefit to the consumer," adds Cilliers.
"Life Right is not a property investment in the traditional sense of the word, but it's the most secure investment which you can make in terms of your long-term physical and health security, financial peace of mind, and continuous care."
"It, therefore, boils down to the question: Who is to benefit from the consumers hard earned money: the consumers themselves during their golden years or their children through inheritance from their parent's estate after their death?
"It's essential to do your homework, thoroughly understand the Life Rights concept, and compare its pros and cons to the other ownership options before making a final decision as it may not suit all investor's long-term financial needs."
Stredder advises, that when consumers are shopping around it is important to always find out how long they can expect to wait for their investment to be refunded in the event of their death or relocation as oftentimes this will only happen when a replacement purchaser has been found.