Will I get a title deed?
Purchasing a life right means you will acquire, for a capital sum, the right to occupy the housing unit for the remainder of your life. This right is not the same as ownership of a property but is similar to the rights of a long-term lease.
The housing unit remains the property of the RA Welfare Development Trust (the seller of the life right). You therefore do not receive a title deed and transfer duty is not applicable.
What’s the difference between a life right and a sectional title?
Once sectional title units have been built, the developer packs up and leaves, leaving the long-term management of the retirement village to its body corporate, which elects trustees. The trustees are normally fellow residents who then appoint a managing agent.
Often, trustees do not have the business acumen or resolve to effectively manage the village. They rely heavily on the managing agent as they often find that the role of trustee is onerous and burdensome, when, in fact, they should be enjoying their retirement. Trustees who are residents also often find the role stressful as they at times have to take unpopular decisions which affect harmonious relations with their fellow residents.
A commercial managing agent may be adept at financial management, maintenance of buildings and the common property, but is unlikely to have experience in the field of holistic care for Elders nor be able to provide an extensive support network and safety net.
Sectional title village residents also have special levies when units and common property facilities require upgrading or maintenance. Life right holders do not have this risk as the developer remains involved with a high level of interest in the resale value of the units.
How much capital is required?
The cottage or apartment is available for a cash payment of the purchase amount. The price for each type of unit is set and not negotiable. Prices are reviewed and adjusted on a regular basis. Contact us for the latest prices of the different units in each village. Unfortunately, occupation is not permitted until the full purchase price has been paid.
Is there a monthly levy?
There is a monthly charge to cover administration and to recover services received. These charges are based on the annual cost of services such as rates, sewerage, water, servicing, external maintenance, insurance, administration costs, security and 24 days per annum, per unit, recuperation in a care centre.
All charges are calculated at cost and every endeavour is made to keep the annual escalation (in April) to the minimum. Electricity is individually metered for and is billed monthly in arrears. There is also a levy stabilisation fund to stabilise or smooth increases from year-to-year, after discussion with the respective Village Committees.
While 24 days per annum, per unit, recuperative care at a Rand Aid frail care centre is included in the levy, the costs of permanent frail care are applicable to those residents using the care centre. These costs are not built into the operating cost of cottages and apartments.
Can I transfer to the frail care centre if necessary?
Residents are responsible for the costs of full-time frail care. However, with the approval of the RA Welfare Development Trust, a percentage of the original purchase price will be available towards this cost, as follows:
Single occupancy: An amount equal to 80% of the original purchase price is held in trust and an Interest-bearing Trust (IBT) discount will be credited to the frail care account. The IBT is referenced to a nominated interest rate.
Double occupancy: On transfer of the first person to the care centre, an amount equal to 35% of the original purchase price is held in trust and an IBT discount will be credited to the frail care account. On transfer of the second person to the care centre, an amount equal to 45% of the original purchase price is held in trust and an IBT discount will be credited to the frail care account.
On application, and subject to the terms and conditions that apply from time to time, the applicable termination benefit or part of it (capital balance) may also be used towards the costs of frail care.
Preferential rates apply for residents transferring to the care centre.
Is there a capital balance paid on death?
On the death of a joint purchaser, in occupation of a cottage or apartment, there is no accrual to the estate of the deceased. On the death of the last surviving person, 80% of the original purchase price will accrue to the estate.
On the death of the first purchaser, if in frail care, no amount accrues to the estate of the deceased. On the death of the last surviving person, any capital balance remaining in Rand Aid will accrue to that person’s estate. The 20% of the purchase price retained by Rand Aid will be used for the continuous provision of services to the less advantaged, after subtracting the costs of refurbishing the vacated unit and making an allocation to the levy stabilisation fund for the village.