Properties

​

One of the most difficult choices to make in life’s journey is whether or not to move into a retirement village, and on what terms. Weighing up the pros and cons is hugely personal, and circumstances vary from person to person.

And one of the most important things to wrap your head around, if you do make the move, is what sort of property contract you should enter into.

There are three possibilities offered in retirement villages – life rights, freehold and sectional title.

The three contracts explained

Freehold

As Rob Jones, managing director of a Retirement Property Company, explains: “You own the land and building, it’s your responsibility, you pay rates and taxes and there is a registered title deed in your name. You can leave it to your heirs and any gains in value would be for you. There may be some exit levy to pay to the complex, but it differs from place to place.”

Sectional title

With this option, says Jones: “You own a portion of the building, say an apartment or townhouse. You will have a title deed and you can leave it to your estate. You are responsible for internal maintenance, while the body corporate takes responsibility for outside maintenance as a general rule. You pay for that in your levies of course. There may be some exit levy to pay to the complex, but it differs from place to place.”

Life rights

“Essentially it’s a lease for the rest of your life,” says Jones. “You’re paying upfront for the occupation of the building for you and your spouse for the remainder of your lives.”

Details differ from village to village, but usually it means that if you pass away and your unit is sold, your estate will get back the amount you paid, but not any portion of the increase in value (gain).