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Why there’s a big shift to the life rights’ investment model for retirement estates

The arrival of Covid-19 and subsequent lockdown period gave many the necessary time for prioritising and perspective. Following lockdown, there has been a surge of interest in nature-based properties, along the coastline and within eco-estates, with a growing trend of retirees now opting for the financially flexible Life Rights purchase model.


According to an American-based news site, Atlanta News Now, families nearing retirement age were surveyed to determine whether they would return to ‘normal’ working life post-lockdown. A quarter of those interviewed said they’d bring forward their retirement after the lockdown. The article read: “Many of these folks said that the lockdown lifestyle has given them a chance to ‘test-drive’ retirement. And they love it, thanks to their newfound free time. They didn’t know they were missing it, and now that they do, their career plans have changed — many want to retire earlier.”

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While the tough financial conditions in South Africa, before and after the lockdown, could’ve been a hurdle for those wanting to retire now, the Life Rights model has proven a valuable financial solution for early retirees.


“Financial stress should not follow people into their retirement years which is why flexible purchase models are becoming so popular,” explained Phil Barker of Renishaw Property Developments. “It gives people a financially attainable method of investing in a quality lifestyle right now. This means moving into a secure estate, with nature-based facilities and modern healthcare provision, without any hassle and stress.”

Image credit: Keran Barker


How does Life Rights’ work?


Basically, a Life Rights purchase model allows investors to enjoy exclusive use of a retirement home or apartment for the rest of their lives. Retirees are able to treat the home as their own, with the developer attending to all home maintenance. If the full price is paid, the deceased estate will get the full purchase price back and the developer retains the house. Effectively, the only downside is that there is no capital gains on the property when it’s sold back to the developer.


What are the benefits of Life Rights?


1. A home for life: This is a secure home in a quality estate for the remainder of the investor’s life.


2. Levy transparency: Although there will be a minimal levy increase year-on-year, there is no          special levy attached to Life Rights.


3. No maintenance: One of the biggest costs of home ownership is the upkeep, but with Life            Rights, the developer is responsible for the exterior maintenance as well as that of the estate.


4. Added extras: Many estates will also offer additional services such as insurance, security,            social activities and medical care with Life Rights.


5. Flexible pricing: Estates offer varying discounts for Life Rights and there is the bonus of not paying transfer duty, VAT or capital gains tax.

Image credit: Keran Barker


Added benefits of the RTO Sectional Title model


Renishaw Hills, a mature lifestyle village on the KZN South Coast, has introduced an even more appealing purchase format, known as the Reversionary Transfer Obligation (RTO) Sectional Title model.


“RTO has a further advantage over Life Rights in that you actually own the unit, rather than pay an amount to live there, as per the Life Rights’ model,” explained Barker. “Ownership gives residents say in the running of the lifestyle village, as Sectional Title villages are owned by everyone. The RTO contract also provides investors with an upfront discount and, upon disposal of the unit, the developer is given first option to purchase the home back at the original price.”


Barker said that, following the hard lockdown, Renishaw Hills had seen a spike in demand for the affordable RTO model, with the estate now offering more units in this purchase format. To find out more about Renishaw Hills’ RTO model or to book a viewing with all Covid-19 health-and-safety protocols, email [email protected]. For more information about the village, its facilities and offerings, visit www.renishawhills.co.za.


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