HOW THEY COMPARE

LIFE RIGHT THE BENEFITS

The buying price could be lower than purchasing a house or a flat of a similar size in the same or a comparable retirement village. This is because you only buy the life right to it and not full ownership, so it tends to be more affordable.

The process can be relatively quick as it doesn’t require registration with the deeds office. As such, no transfer or bond costs apply.

The developer, as the sole owner of each unit, is responsible for maintenance as well as the upkeep of the units in the retirement village and its facilities. This could apply to both the exterior and interior maintenance of your unit. Your contract should specify the extent of upkeep that the developer commits to.

SOME DISADVANTAGES

A life-right option cannot be regarded as a property investment as there is no asset that grows in value from which you or your estate stand to benefit financially, says Marina Constas, a specialist community schemes attorney and a director at BBM Attorneys.

Should the developer become insolvent and require a sale in execution of the property, the life-right holders are also creditors. It means you won’t get your money back immediately, and there could be other creditors who’ll be paid out before you. It’s best to research the property developer’s background – a quick online search of the developer’s name should bring up results of any court cases or legal claims against the developer. It’s also worthwhile asking for personal references from people who’ve bought from a specific developer.

It can be difficult to understand all the legalities, so ask a lawyer for advice. You have to ensure you understand the terms and conditions of the contract.

You should make sure you’ll be able to use all the facilities. Ask for instance whether use of the different facilities, such as a bowling club or gym, is included in your levy. If not, ask how much extra you’ll have to pay to use it.

You can’t finance it with a home loan.

SECTIONAL TITLE THE BENEFITS

You’re purchasing an asset that can grow in value.

You can bequeath it to a beneficiary in your will. The beneficiary will have to adhere to the retirement village’s rules. For example, if your 30-year-old son inherits the sectional title in a retirement village that has an age restriction of at least 65, he cannot live there, but he can rent it out to someone who’s 65 or older. So he still has the benefit of a rental income from it, or he can sell it and invest the money elsewhere.

SOME DISADVANTAGES

If you want to change your home, you need permission from the body corporate. Some villages are quite strict as they want to keep the exterior of all the units in the same style. So you may have to get permission to add a garden wall, an extra garage or a braai area, for example.

As an owner you’re liable for the debt of the body corporate if the sectional title scheme isn't well managed. Be sure to check the financial statements – it’s your right to know.