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From buying a retirement home using life rights to the pros and cons of buying a home, our experts come to the rescue

Q: My spouse and I are pensioners and considering buying into a retirement village. We are worried, though, about spending such a large portion of our savings and having all the maintenance responsibility at this stage in our lives and have been told about the life rights option. How exactly does this work?

A: The life rights model involves acquiring the right to live in a particular home for life rather than owning the real estate itself. A life right allows a resident to occupy the property throughout their lifetime – and that of their spouse. However, when the life right terminates, it remains the property of the developer, and therefore it is maintained to a high standard, refurbished and made available for resale by the developer. The life right concept is attractive for the older person, who may have neither the desire nor the ability to maintain a property. A capital amount is paid to the developer, who remains the legal owner responsible for maintaining the units, village and facilities. Purchasing a life right at a retirement village brings the added advantage of financial flexibility which can be reassuring for people who may well require expensive medical care and frail care at some point in the future. Given that most homeowners are advised to spend 1% of the value of their property on maintenance annually, it presents major savings for retirees as it relieves them of this burden since this responsibility rests with the developer as legal owner. – Cobus Bedeker, managing director of Evergreen Property Investments Q: I am looking to take advantage of the buyer’s market by investing in property – more specifically a residential property in a mixed-use development. Is this a good idea? A: Property trends prior to the nationwide lockdown showed investor sentiment shifting towards mixed-use precincts as offering greater value than large, stand-alone houses in South Africa’s property market. Living and overhead costs associated with stand-alone properties have continued to rise, tipping the scales for many South Africans towards downsizing to more centrally located residences. Added to this, an increase in residential rental demand has seen mixed-use precinct residential units becoming the most potentially lucrative buy-to-let choice for the savvy investor. Rental demand within the mixeduse sector is likely to accelerate in the current climate. The convenience of having all daily amenities within walking distance of one’s home, within a safe and secure environment, certainly makes for a desirable quality of life and enduring sense of well-being. – Guy Gordon, managing director of Amdec Property Developments

Q: I have signed a lease with my landlord for a year but find myself needing to move out earlier. How can I safely cancel my lease agreement without being in breach of the contract?

A: The answer to the question will depend on the cancellation clause within the lease agreement. Unless there are grounds for cancellation of the agreement, which is stipulated in the cancellation clause, it can be difficult to get out of a lease agreement without any recourse. If the lease agreement doesn’t contain a cancellation clause, the tenant can be considered to be in breach of the agreement if they decide to terminate the contract prematurely. If the tenant has breached the contract, the landlord is within their rights to demand that the tenant pays the rental amount due to them for the remainder of the agreed upon tenancy period. If a landlord has met all the conditions of the lease, the tenant cannot simply terminate the lease agreement. They will have to discuss the matter with the landlord and agree on a solution, such as another tenant taking over the current lease agreement or subletting the property for the remainder of the lease period. It is imperative that any agreement made between the two parties is in writing to avoid any confusion or backlash further down the line. The Consumer Protection Act (CPA) allows tenants to provide the landlord with 20 days’ notice if they choose to cancel their lease before it expires; however, this does not completely absolve the tenant of any responsibility. While a tenant has the right to move, if the landlord has met the requirements of the lease, they are within their rights to recoup reasonable costs that they may incur during the search for a replacement tenant. – Adrian Goslett, chief executive of Re/Max of Southern Africa

Q: I have a stable job with a national company and earn a decent salary. I have been renting for years but am being told that I should be looking to buy a property in the current buyer’s market. I know I could probably afford to buy but this is a big step that I am not sure I am ready for. At the same time, though, I do not want to lose out on a good opportunity to take my first step on the property ladder. What should I do?

A: Even in a stable market there is often debate around this topic and the answer is not cut and dried. That said, the current state of affairs, believe it or not, does present some real opportunities for both sides of the fence. The low interest rate environment (likely to persist for at least another three years) gives direct cash flow relief and interest savings to those with home loans. These savings mean improved affordability for those in the market for a new home, making it cheaper to own your dream home and it can give you the opportunity to afford something previously out of reach. To quote a crazy old property economics lecturer of mine, “you make money when you buy property, not when you sell it”. Given the current market and the low repo rate, this statement couldn’t be more apt. The present situation lends itself to making good buying decisions that will increase the prospect of capital growth in the future. Furthermore, you are getting good value for your buck, with a wellpriced, bigger property pool to choose from. – Ryan Flowers, asset manager at Flyt Property Investment

* Need a home loan specialist? Click: https://www.iolproperty.co.za/mortgage_application_signup.jsp

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