There are certain things that you should know before you make the decision to purchase property in senior living communities.
Luxury retirement villages and retirement developments are becoming increasingly popular as South Africa citizens seek a safe place to settle into their retirement.
However, these retirement communities are typically modern and luxurious, resulting in high purchasing prices and consequently, other related fees.
We have put together a list of 10 things you should know about before investing in senior living communities, also known as retirement communities.
Most homes in retirement communities are sold on a 99-year lease period which is considered a notarial lease and is registered in the Deeds Office.
Each time ownership of the property changes, the lease period defaults back to zero and will run for the next 99 years.
As the owner of the property, you may sell it whenever you choose to. Generally speaking, the sale process will be managed by a designated property group or professional at a predetermined commission rate.
A certain percentage of the commission will be reinvested into the estate for the Levy Stabilisation Fund.
After the sale, the lease will be renewed for 99 years and at a certain percentage of the selling price. From that percentage, an additional portion will be returned to the Levy Stabilisation Fund.
The monthly rates and taxes are often determined according to the stand as well as the design of the house on the stand.
Most senior living communities include a mandatory meal allowance per person which comes as an additional monthly expense.
Meals are typically served in an on-site cafeteria or in-house restaurant, otherwise as a limited number of frozen meals which can be selected and ordered on request.
These are additional monthly utilities which are charged according their rates set out by the government as well as each home’s usage.
Should there be any form of gas installations in the home, monthly expenditure is based on pay-as-you-use system. In other words, when the gas cylinder runs out, you will be responsible for having it refilled, as well as the costs incurred.
With new retirement developments, you may have the opportunity to customise your home. With each customisation, you will be faced with additional charges based on a certain percentage relative to your requests.
A predetermined deposit amount is typically required within a certain number of days after signing the offer to purchase.
If you are purchasing a stand which still needs to be developed, the balance payable is usually due within 30 days of signing.
Thereafter, once construction begins, monthly costs related to the progress of the construction may be billed.
After your stand or property has been registered or transferred into your name, you will be given access to the estate so that you may come and go as you please.
Different estates will have different types of access permissions ranging from biometrics to magnetic tags or passcodes.
Senior living communities are becoming more popular among South African residents as these communities offer increased safety and security.
However, before purchasing a stand or home in retirement communities, it’s important to be aware of additional costs that may come with such a purchase.
For more information, please feel free to contact our conveyancing attorneys in Cape Town and Johannesburg.
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