Housing needs for your retirement

Housing needs for your retirement

When buying into a retirement housing scheme, it’s important to scrutinise the form of ownership because your legal rights and obligations vary greatly with the different types of schemes.

Retirement villages (or schemes) can be structured as follows:

Sectional-title ownership

As the owner of your unit, you’ll receive a title deed and must pay transfer duty and conveyance costs. The developer carries no responsibility for the ongoing maintenance and cost management once the development has been built – it’s up to the residents to do so. Obtain as much information as possible about the body corporate, its finances and its proposed activities. For instance, establish which legislation takes precedence – the Sectional Title Act or the Housing Schemes for Retired Persons Act.

Share-block ownership

By purchasing a number of shares in the company, you’ve the right to use the residence and complex’s facilities. The transfer of shares is similar to a sectional title or conventional transfer of ownership. Your share-block transfer is not registered in the Deed Registry, but a sale agreement is nevertheless required and transfer duty is payable to the Receiver of Revenue. The Share Block Control Act 59 of 1980 regulates the operation of a share block scheme. While you don’t own your unit, you can play a role in the management of the scheme through a general meeting of shareholders. However, should the company go insolvent you’ll be left with worthless shares in an insolvent company.

Life rights

You and your partner have the right to occupy your cottage or flat for the rest of your lives, but you won’t own it. This is probably your cheapest option as there’s no transfer duty or tax payable. When the occupant dies (or decides to leave the unit) his or her heirs or the occupant is paid back what was paid for the unit. Depending on the particular contract, 25% of the profit after costs (holding back some of the profit enables the owner to refurbish the unit) is sometimes also returned. The Housing Development Schemes for Retired Persons Act requires the developer to provide a “statement of basis” upon which any levy is to be calculated as well as an estimate, for a period of two years in advance, of the amount of the levy. In other words you enjoy levy transparency and the ability to plan around predictable costs.

Full-title ownership

The property is registered in your name and you are liable for services such as rates and levies. A homeowners’ association maintains the public areas in the retirement village and provides security and other services.



Revised by M Collins