Neighbourhood 27 JANUARY 2019
PROPERTY & LIFESTYLE
Time to slow down Deciding where and how to buy your retirement home can be nerve-wracking. We help you see the wood for the trees, page 6 2
THE NOT-SO-HIDDEN COSTS
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LIFE RIGHTS V SECTIONAL TITLE
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POTENTIAL STUMBLING BLOCKS
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PROPERTY NEWS
27 JANUARY 2019
Neighbourhood
What lies beneath When it comes to buying a property, it’s vital to take additional costs into account. They’re not hidden, but these figures often come as a shock. WORDS: ANNE SCHAUFFER
IMAGE: SHUTTERSTOCK
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hen you’re property shopping, understand and budget for the costs over and above the purchase price. They shouldn’t come as a surprise, but rather be considered part and parcel of the buying process and cost. There are a number of costs covering different “functions” of the process. Today you can access the costing online, so you have a good estimate from day one. Once the process gets underway, some conveyancers, such as Meumann White Attorneys, allow you to track your property transfer.
What costs are involved?
These are the property transfer registration costs; if the purchaser requires a bond to be registered over the property there are bond registration fees; and transfer duty.
Who is it paid to?
The property transfer fees and disbursements are paid to the property transfer attorney (otherwise called a conveyancer), usually appointed by the seller to transfer ownership to the purchaser. This cost varies and is dependent on the purchase price. The costs payable to the property transfer attorney comprise the conveyancer’s fees plus VAT, the transfer duty payable to Sars, estimated rates, levies, and other standard disbursements. If the purchase price of the property is less than R900,000, you’re exempt from paying
transfer duty. The bond registration costs are paid to the bond registration attorney. If the seller had a bond registered over the property, that bond has to be cancelled, in which case a bond cancellation attorney is instructed by the bank which initially gave the seller a loan. These bond cancellation costs are paid by the seller.
How to work it out
Rhys Dyer, CEO of bond originators ooba, urges buyers to access ooba’s easy online bond and transfer costs calculator. Input your property price and size of home loan, and you’ll have the relevant acquisition costs within seconds. Dyer believes education around these costs is vital, and should be understood and budgeted for before shopping for a property. These costs cannot usually be included in the loan applied to for the purchase price. “Depending entirely on the circumstances of the buyer,” says Dyer, “first-time homeowners can get up to a 104% bond for a property being sold for R1m or less. Securing more than a 100% bond, the home loan financing is likely to cover the cost of the property, as well as the transfer duty and related start-up costs such as conveyancing fees, bond registration costs and the cost of valuing the property. That means they’ll have enough to cover the monthly home loan repayment without paying a deposit. Each case is looked at individually, and the banks (only two currently do this) generally
only do this for clients who earn below about R23,000 per month. The customer would need to have sufficient affordability and a strong payment history.”
Raising funds
For those who don’t qualify, saving for a deposit and costs can be challenging. “We advise customers to start saving for these costs around two years before they intend buying a property. Change your spending habits, so you have extra to save every month, plus any bonuses or gifts. Other options are to use some of the profit you’re making on selling your existing property; borrow against your pension fund; consider the financing or re-financing of a movable asset such as your vehicle; or if you’re not selling your existing property, draw against your access bond facility or take a bond on this property if it’s currently unbonded; consider applying for a personal loan; try selling unwanted and unused goods; and finally, perhaps borrow these costs from your parents ,” Dyer says.
The unhidden costs unpacked
The two main costs are therefore: • the bond registration attorney’s costs and disbursements • the property transfer attorney’s costs and disbursements – which includes the transfer duty payable to Sars, estimated rates payable to the municipality, estimated levies (in the case of sectional title), deeds office fees, and other sundry and petty items
Example If the price of your new home is R2,5m, and you’ve been approved for a home loan of R2m, your total costs, estimated by the ooba calculator, including VAT, are R179,608. Bond registration costs (incl VAT) Bond registration cost (incl VAT) Bank initiation fee (incl VAT) * Post, petties, Fica and other fees (incl VAT) ***
R36,710 R29,187 R6,038 R1,485
Transfer costs (incl VAT) Property transfer costs (incl VAT) Transfer duty ** Post, petties, Fica and other fees (incl VAT) ***
R142,898 R33,413 R108,000 R1,485
* This is a once-off bank fee. Certain lenders may charge a higher amount for juristic entities e.g. companies and trusts ** If the seller is a VAT vendor, there will be VAT payable on the purchase price *** Approximation
Sars table for transfer duty
(1 March 2018 to 28 February 2019)
Value of the property (R)
Rate
0 – 900,000
0%
900,001 – 1,25m
3% of the value above R900,000
1,250,001 – 1,75m
R10,500 + 6% of the value above R 1,25m
1,750,001 – 2,25m
R40,500 + 8% of the value above R 1,75m
2,250,001 – 10m
R80,500 +11% of the value above R2,25m
10,000,001 and above
R933,000 + 13% of the value above R10m
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SCHOOLS IN YOUR AREA
Sunday Times Neighbourhood Congratulates the class of 2018. Well done matrics!
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Congratulations Class of 2018! 8 A SYMBOLS Priyal Jeena Gayoung Yoo
Danville Park Girls’ High School 24.1% achieved A aggregates
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The Danville Class of 2018 did exceptionally well in the NSC exams last year. We are very proud that very single girl who wrote matric passed. That means that for the past 25 years Danville has had a 100% pass rate! As impressive is the fact that 94.48% of our girls obtained university entrance passes. The other 5+ % obtained Diploma passes. 24% of the Class of 2018 achieved A aggregates - nearly one quarter of the whole grade! The number of subject As in 2018 was 323 - an average of 3.14 per learner, as oppposed to 297 in 2017, reflecting an upward trend.
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Celebrating 120 years
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Durban Girls’ College
141 Years of Academic Excellence Durban Girls’ College applauds the Class of 2018 on their outstanding IEB results. We recognise the hard work and dedication of our teachers, without whom these results would not have been possible. The Class of 2018 has truly demonstrated their academic excellence. Now it is time for these remarkable young women to go out and enrich our society. Durban Girls’ College wishes them well as they embark on their onward journey. 100% Pass Rate 100% Bachelor Pass 226 Distinctions 3 in IEB List of Outstanding Achievers nationally 77% of all symbols attained are A’s and B’s 25 placements in the top 1% nationally for individual subjects
Cenelle Gounden 7 Distinctions IEB Outstanding Achiever
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CO N SC I O US LI VI N G
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PROPERTY NEWS
27 JANUARY 2019
Neighbourhood
Retirement focus
Choose the right model Life rights or sectional title? Here’s what you need to know. WORDS: KIT HEATHCOCK IMAGES: SUPPLIED & SHUTTERSTOCK EVERGREEN ZIMBALI, KZN
P
urchasing a retirement home is so much more than a bricks and mortar property investment. You’re buying into a lifestyle, looking for a peaceful, caring environment that will support you through the rest of your life. Two different purchase models are prevalent in South African retirement developments. Traditionally sectional title is best known, but the life rights model has increasingly gained popularity.
says Arthur Case, Evergreen Lifestyle, the retirement subsidiary of the Amdec Group, who are expanding into KwaZulu-Natal with a development at Umhlanga Ridge. “With transparent and affordable levies, pricing tailored to fit your budget, and tenure guaranteed for life, the prospect of living longer is no longer cause for anxiety.”
The difference?
A sectional title scheme has the advantage of a known and straightforward model of property ownership and the capital gain associated with a property investment. “We considered life rights, but ultimately chose to go with sectional title ownership,” says Craft Homes development director Charl May, currently developing The Retreat at Hazeldean, Pretoria.
Sectional title is an outright property purchase. Your house is your own, can be willed to your heirs, and appreciates in value according to the current property market. Maintenance is your responsibility and a body corporate made up of property owners, usually working with a management company, runs the common areas and facilities.
BUH-REIN ESTATE, CAPE TOWN
Life rights give you and your partner a right to live in your house for the rest of your life, but ownership remains with the developer. The developer is responsible for maintenance of the property and management of common facilities. Upon your death the life right is sold on, and your estate receives an agreed percentage of the original entry price.
Life rights
THE RETREAT, PRETORIA
One reason for the increase in popularity of life right schemes is that a lot of the hassles of property ownership are taken care of for you. “It guarantees professional management, taking away the day-to-day worries facing body corporates such as security, clubhouse management, maintenance and insurance,” says Leon Cohen, Rabie Property Group, who is launching their Oasis Life retirement developments at three sites around Cape Town. “Also, the developer is in it for the long haul. By retaining ownership of all homes as well as the common property, it’s in the developer’s interest to maintain the village and its facilities to a high standard.” The purchase price of a life right is generally lower than full ownership of a similar property in the area, and monthly levies are set from the beginning, with no extraordinary levies applicable. “Ultimately, life rights deliver peace of mind and freedom from financial worry,”
Sectional title
“Our buyers consisted mainly of owner-occupiers and children buying for their parents. The owner-occupiers preferred direct ownership, desiring to have secured ownership if they pass on, so as not to burden their partner with the complications of life rights. The children generally see the property as an investment in the short term and a property they could retire to in the long term, and want the financial benefit of direct ownership.” Owners belong to the body corporate, so they have a say in the running of the retirement village. Should there be unforeseen maintenance expenses, extraordinary levies might need to be financed. “Both life rights and sectional title have intrinsic benefits,” says Claudius Combrinck, MD, Imagine Property Consulting, currently involved with De Plattekloof Lifestyle Estate in Cape Town. “Sectional title retirement schemes allow retirees the extra benefit from capital appreciation similar to the typical residential property market.”
Another option An alternative model to consider, is Renishaw Property’s increasingly popular revisionary transfer obligation (RTO) sectional title model. “Renishaw Hills is unique in that, on selected sites, it offers a sectional title purchase option at a significant discount which essentially mimics the life rights model. This is in
27 JANUARY 2019
Neighbourhood
PROPERTY NEWS
7
EVERGREEN HILTON, KZN
terms of a RTO contract providing for reversion of ownership of the home, on disposal thereof, to the developer, at the price originally paid for that home. This model provides a more affordable entry point, while allowing the purchaser to enjoy all the benefits and facilities of an upmarket village,” says Phil Baker, MD, Renishaw Property Development.
The purchase price of a life right is generally lower than that of a house or apartment of similar size in a comparable area. With freehold and sectional title properties, however, the buyer pays according to a market-related price. ARTHUR CASE, CEO, EVERGREEN LIFESTYLE
Due diligence
NEW RETIREMENT DEVELOPMENTS
Whichever model appeals, it’s essential, just as with any property purchase, to look carefully into the fine print of the contracts and check out the financial standing of the development. What are the arrangements should you wish to relocate? How are levies calculated and what do they cover? Are the promised facilities already in place or what’s the time frame for providing them? Speak to the residents too – they’re the best barometer of the lifestyle and community you will be buying into.
• Oasis Life: Clara Anna Fontein, Burgundy and Century City (WC) • Evergreen Lifestyle: Umhlanga Ridge, Zimbali, Hilton (KZN); Val De Vie (WC) • CPOA: Quadrant Gardens, Claremont (WC) • Craft Homes: The Retreat, Hazeldean (Gauteng) • MSP: Buh-Rein Estate retirement village (WC) • De Plattekloof Lifestyle Estate (WC) • Shoreline Sibaya (KZN) • Renishaw Hills (KZN) • Lazuli Coastal Retirement Estate (KZN) • The Village at Langebaan Country Estate (WC) • Blok: EightOnN (WC) EVERGREEN UMHLANGA RIDGE, KZN
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These are situated in magnificently landscaped gardens within a highly secure estate. Additional units are currently being built in the new Inverness Wing to meet the increasing demand for luxury, yet affordable, retirement. All apartments are finished to the highest standards, fitting for the finest lifestyle village in KZN. With a choice of a wide range of facilities, security, medical care and various services, you and your family will have peace of mind. Enjoy a sundowner in the MacGregor Bar or take a casual stroll to the spectacular Community Centre for a glass of wine on the deck whilst taking in the beauty of glorious sunsets over the Valley of a Thousand Hills.
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PROPERTY NEWS
27 JANUARY 2019
Retirement pitfalls Avoid these potential stumbling blocks when buying your retirement home IMAGE: SHUTTERSTOCK
I
nvesting in a retirement village is a major life decision that requires extensive research and serious considerations.
Neighbourhood
2 Construction
5 Purchase model
There are endless stories about poorly constructed retirement estates the world over, that have left investors battling court cases and seeking alternative housing options. You need to look at the building materials and check that the construction companies and architects working on the retirement estate are all properly accredited.
Currently the two main purchase models for retirement estates in South Africa are sectional title properties or life rights. With life rights, you’re investing in a home for the remainder of your life, but essentially don’t own the property. Sectional title is the separate ownership of units in the development, with the undivided share of common property.
Phil Barker, managing director, Renishaw Property Developments, says the Renishaw Hills mature lifestyle development on the KwaZulu-Natal South Coast has been designed to put quality of life first. “We analysed retirement development models internationally and locally to ensure we were providing residents with a holistic retirement investment that was financially accessible, while also creating an inviting living space,” says Barker.
3 Levy costs
6 Opportunities
“There are so many elements to consider when establishing a retirement estate that many people often overlook, and we’re confident that Renishaw Hills ticks all the right boxes.”
4
It’s important to remember that a retirement home, while possibly the last home you will invest in, is likely to be a place you reside in for decades, so it has to meet all your specific needs.
If you’re looking to invest in a retirement home, Renishaw Hills have outlined eight potential pitfalls to avoid:
1
Location
A retirement estate might appear to have all the necessary facilities and amenities, but location is vitally important when investing in property. You’ll need to consider the proximity to medical facilities, retail centres, entertainment and transport networks.
A high levy might not necessarily mean you’re getting everything you pay for. When researching retirement estates, make sure you understand exactly what’s included in the monthly levy because this is an ongoing cost that should make retirement living easier. Things to consider are maintenance and insurance costs, garden services, internet access, security, health care options and the use of estate facilities.
Health care services
When it comes to retirement, health has to be a consideration, even if you’re in peak physical condition when you invest. Retirement estates may offer frail care services, have a frail care unit on site or have no health care facilities at all. Renishaw Hills and its health care provider, TruCare, offer home-based health care solutions tailored to the individual. Rather than following the traditional frail care model, home-based health care means residents receive treatment from the comfort of their home, with couples able to stay together even when one is in need of care. Residents are also offered personal medical advice as a way to prevent future health issues.
When you retire, hobbies will take a more central role in your life, so you need to ensure that your particular interests are catered to at the retirement estate. Check what facilities are available, the terms of use, whether there are any social clubs or community initiatives in the area, and what sports or outdoor excursions are around.
7 Home configurations
When investing in a retirement estate, you have to consider long-term health restraints rather than your current abilities. This means elements such as the stairs and home layouts need to be carefully considered. Even a single step, gentle gradient or uneven flooring can create untold hassles later on.
8 Developer’s background
Unfortunately, there are many developers looking to make a quick buck out of retired individuals which means poorly constructed homes with inadequate access to facilities and services. Find out everything you can about the estate developers so you’re assured they’re looking out for your best interests.
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A BALANCE OF VALUE AND AFFORDABILITY at Renishaw Hills, Scottburgh
Secure your dream home from as little as R1.340 million.
After all, you’ve spent most of your life preparing for this moment, so why not make the choice that delivers true value for your money? At Renishaw Hills, our commitment to quality, value and community is reflected in everything we do. It’s why we offer stunning two-bedroom homes starting at R1.340 million on Reversionary Transfer Obligation. This purchase option is similar to the standard Life Rights Model, offering significant discounts that result in highly competitive prices. For those looking for an investment opportunity, we also provide Sectional Title Ownership. This makes it the ideal choice for buyers who prefer that their retirement property form part of their estate.
“It’s the place I dreamt of all my life.” – Beattie Barkley, Resident. We’ve flipped the notion of retirement with an estate and tight-knit community that enables residents to live out the best years of their lives. Our lush indigenous surroundings and spectacular views are celebrated daily thanks a coastal climate. Enjoy breakfast on the veranda, a leisurely walk on our trails or a trip down to the beach. With every option on your doorstep, the choice is entirely yours.
For more on how you can secure your sanctuary at Renishaw Hills, please get in touch with us today. We can’t wait to welcome you home. Julieann: 084 514 8028 | sales@renishawhills.co.za www.renishawhills.co.za | www.facebook.com/RenishawHills
The start of a new adventur
THE LUXURY YOU WANT THE LIFE YOU DESERVE
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Come and have a look at our luxury apartment 8555, available daily for viewings WARREN BECKER 082 302 3004 | warren@thehoughton.com
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