Reduce the pain of downscaling: Investing in a holiday home as a retiree
The decision to move out of a large residence in favour of a smaller or less expensive property, also known as down-scaling, is often viewed as a last resort in the face of mounting financial pressure. However, for many retirees, the decision to downscale is driven by the prospect of greater freedom. As one gets older, the responsibilities of maintaining a large freehold home and undertaking activities such as garden and pool maintenance, cleaning, and repairs, can become overwhelming. Still, many older individuals feel a natural emotional connection to their homes. After all, they’ve seen their children grow up in it, and they’re unwilling to lose these memories entirely. Thus, some retirees with cash to spare are opting for a ‘best of both worlds’ approach. This involves purchasing a smaller primary residence in a life rights estate or sectional title complex and converting their former home to a secondary residence or holiday home. The coast beckons As to the kind of retirement properties this demographic is purchasing, Light-stone data shows that the Western Cape is the only major region where properties in estates (55%) are more popular among retirees than freehold and sectional title homes. It’s no secret as to why estates are so popular among discerning retirees they offer safety, lifestyle, and a built-in community of like-minded individuals to ensure that new residents feel comfort-table and supported in their new life stage. Downscaling with the intention of making budget available for a holiday home is also proving to be a popular trend among South Africa’s retirees and the majority of them are heading to the coast. This is especially prevalent among those who own an inland property and are in search of more leisure activities. Data from ooba Home Loans shows that for all bonds granted between June 2021 and June 2022, 0.41%, 0.18%, and 1.04% were for holiday properties in the Western Cape, Kwa-Zulu Natal, and the Eastern Cape respectively. A home close to home Generally, retirees are purchasing holiday homes that are easily accessible. Those wishing to go down this path are encouraged to choose a holiday home within comfortable driving distance from their new retirement unit, to ensure that they are able to enjoy it regularly. In the Western Cape, for example, popular holiday destinations such as Langebaan, Hermanus, and Betty’s Bay are all less than two hours outside of Cape Town. Lightstone data shows that 57% of individuals who own two properties prefer to own these in the same province. Pros and cons of investing in a holiday home Of course, holiday home ownership as a retiree has its pros and cons, and there are a number of important considerations to keep in mind before embarking on this journey. Pros: Keeping a special family home intact: For those who are converting their prior primary residence into a holiday home, this decision allows retirees to return to the place that holds happy memories, and create new ones. Less day-to-day maintenance: Making a large home your secondary residence means that there will be less daily wear and tear on the home that will need to be addressed, especially if the house is occupied only a few times a year. Additional income: Should you wish to rent out your holiday home, this is a great way to earn passive income as a retiree. It’s important to remember that renting out your home comes with various day-to-day responsibilities such as regular cleaning and guest check-ins. It is therefore recommended that you hire reliable staff to manage these tasks, as they can become burdensome. A value-building investment: A well-located and maintained holiday home will only appreciate in value as the years go on, giving you a lucrative asset to leave behind for your loved ones. Cons: Additional security concerns: Crime is a reality in South Africa, and if a property is vacant for a large period of time, criminals may take note. Be sure to invest in a good security system and regular monitoring from a local private security company. Additional expenses: If the bond on your former family home is not paid off, or if you have purchased and financed a new holiday home, you will have to factor in monthly repayments that will be subject to interest rate increases. Additional responsibilities: Depending on the size, location, and whether or not you are renting it out, taking on the responsibility of a holiday home may reduce some of the ‘lock-up-and-go’ lifestyles sought out by retirees. Conclusion Retirees who are considering investing in a holiday home are urged to take into account the additional responsibilities that this will entail and, if possible, to find help in sharing the load. Be sure to speak to family members. If they wish to enjoy the benefits of a holiday home, perhaps they are also willing to help manage it. Your ‘Golden Years’ are meant to be a time of relaxation and pleasure and your seaside cottage should facilitate beach walks and sunrise meditations, not additional stress and financial pressure. WRITTEN BY GUS VAN DER SPEK Gus van der Spek is the owner of Cape Town-based retirement development Wytham Estate. While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.
Take your homeowner relationship to the next level
Despite the recent interest rate increase, South Africa is still currently in what is deemed a “buyer’s market”, where first-time homebuyers are enjoying the opportunity of entering the property market at a much earlier stage than their financial situations would have allowed in previous years. But it’s precisely the fact that so many homebuyers are entering high-stakes financial decision-making for the first time that requires a crash course in basic questions that will help you make the most of the opportunity. Because just like falling in love, buying your first property can easily leave you seeing the world through rose-coloured glasses. So, before you take things to the next level with your dream home, take a second (or few good hard moments, hours, days – however long it takes you) to ask yourself the following questions. 1.Is it young love or have you found the real thing? Aaaah, falling in love. We all remember those first few weeks of utter hormonal bliss and being absolutely mesmerised by our high school crushes, don’t we? Well, it’s the same with a property. Falling in love is easy. That first tour through the property often makes everything look perfect, as if you stepped into the home you’ve been daydreaming of. But just wait till the second tour. That’s where you pick up on the irritating character traits and shortcomings you somehow missed while in your infatuated state. This is where you find out if it’s true love. So, take that second tour of the property, and see if it wouldn’t be better for you to continue seeing other people. 2.Are you (and your income) ready to take things to the next level? Going on a few dates, buying flowers and gifts here and there – dating usually isn’t a great financial burden. Once another person becomes a constant factor in your budget, however, the effect isn’t quite as inconsequential. So, get out your calculator and start number crunching. Owning a property comes with more costs than bond repayments. Agent fees, legal fees, transfer fees, monthly rates and taxes, general upkeep and maintenance — these are just a few of the major costs you need to keep in mind, on top of your monthly bond repayment, when finding room in your budget for homeownership. This step may very well require you to call in the cavalry and get professional advice on the additional costs and whether your current financial situation can accommodate them. 3.What are you looking for in the perfect home? Being on the dating market is the most terrible place to be, especially when you’re wondering whether every person you meet is “the one”. When your only criteria in the property market is simply for the home to be on the market, finding the perfect match is going to be a nightmare. The only way to find your one true home, is to look for the specific characteristics. It’s important to go beyond “two bedrooms with a yard”. Do the rooms get sunlight for your painting hobby? Is there enough space for that second bookshelf or your yoga corner? Is there enough shade for summer picnics? Will your vegetable garden get enough sunlight and shade? It’s important to remember that buying a home is a long-term relationship, and the property has to accommodate your life. 4.Why have you, my dear abandoned home, been on the market so, so long? There is nothing wrong with finding love later in life. However, when talking about a for-sale property, the question has to be asked: Why is no one interested? It’s not like it has been focusing on its career. Luckily, with a property that has been on the market for an extended period of time, you don’t have to rely on Facebook stalking to find the untold story. With the assistance of home inspection services, buyers can truly get to know the prospective property, inside and out, before the Offer to Purchase is drafted. This will allow you to decern whether the property has been on the market due to flaws and damages or whether the home has been waiting just for you. Where the seller is aware of any flaws, a disclosure form is attached to the Offer to Purchase, indicating the flaws and how they affect the value of the property. But even when a property is not sold voetstoots (as is, with all its defects detailed in the Offer to Purchase), it can still be difficult to be recompensed for damage claims once the sale is finalised and you’ve settled into your new home. So, do your due diligence and go over any prospective properties with a fine comb. 5.Going steady or still seeing other people? As with any relationship, you need to know if things are serious. When you’re head over heels about a property, it’s a good idea to find out if others have made offers before you. This will indicate to you how quickly you need to make your own offer. If you’re facing off with other interested buyers, you simply cannot delay in getting your Casanova going and making your own offer. However, if the property has been waiting just for you, you may have more room to negotiate the terms of sale. Now we aren’t relationship experts, but we are property experts. And we look forward to hearing from you and helping you take things to the next level in your real estate journey. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
Have you outgrown your current home?
Knowing when to move is not always as straight forward as one might think. At times, the need for a change is apparent and unavoidable, but other times, it grows over time and may even go unnoticed. Let’s have a look at a few of the biggest indications that it might be time to move house. Growing pains A home should be a place where you (and your family, if you have one) should feel comfortable. Feeling cramped in an apartment or house that has simply grown too small over the years is not ideal. Whether it comes with the accumulation of possessions (from books to art to knick-knacks) or additions to the household (from human kids or those of the furry variety), homes have a tendency to start splitting at the seams when one’s life simply outgrows its four walls. The same goes for when your house just begins to feel too big. For many, this can happen after children have left the coop and moved into their own living spaces. However, this can also happen simply due to a personality change, when the walk between the kitchen and the living room just doesn’t feel worth the effort anymore as the years go by. A home that feels too large is as detrimental to comfort as one that’s too small. Digging into your wallet A big indicator that it may be time to move is when the costs of upkeep simply don’t fit in your budget anymore. From older properties that require more maintenance as the years go by to first-time homeowners who simply didn’t bargain on having to fix their own burst piping, the costs of property upkeep can sometimes catch us off guard. When your home begins to feel like a money pit into which all your money is disappearing, you won’t be able to truly enjoy the experience. Another financial factor that influences your satisfaction with your home could be the hours-long commute you face every day. Living a few kilometres away from work is unfortunately something that many people have to face in the scarce job market. But even so, when the commute is taking away from your appreciation of your home, it may be time to look for something closer to your place of work. The comforts of home Homes are there to be lived in. Our homes should be shaped to our lives, evolving as our lives change. Sometimes, though, our homes simply can’t evolve with us anymore. From new pets, hobbies, work, school, children, and radical dreams such as building your own home, there are many occurrences that can pop up in your life that may be incompatible with where you live right now. Your home may also hold too many memories of events in your life that you’re trying to move on from, such as the loss of a loved one. In these scenarios, finding a new home may also be the best way to find closure and move to a new chapter in your life. The most important part of any home is the fact that you need to feel at home — if you don’t, it’s time for you to start looking for one where you do feel at home. When it’s time to start the search, get in touch with your trusted estate agent to help you find the home that’s perfect for you. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
It’s not all fun and games with holiday homes
Finding a holiday home isn’t as simple as choosing your favourite holiday spot and packing your bags. With the festive season around the corner, the urge to buy a holiday home may be rising, but a decision like this demands time and careful consideration. Let it simmer. This is not a holiday – this is an investment. Just like those of us who want to avoid over-crowded beaches and rush-hour-like traffic when travelling, you may want to wait for the off-season. Property prices, as well as both the buyer’s and seller’s expectations, may be affected by the holiday buzz. Be sure to conduct the necessary research. Owning property in an area is different from simply visiting for a week or two during the holidays. Make sure you choose a location suitable for a home, not just a pit-stop. Consider the area’s liveability both in and out of season. Quite often holiday destinations become ghost towns when the holiday season ends. If that is exactly the peace and quiet you want, perfect! If it’s not, you may want to continue your search, because, contrary to their names, holiday homes can’t only be lived in during holidays. Homes need constant maintenance and care. Staying close to your holiday home will allow you to break away for weekends, making sure the home receives the necessary attention. If your holiday home is a bit too far from your current residence, consider renting it out for the periods when you are not there. This will ensure your property is well-maintained as well as offering you an extra income. When choosing to rent out your property it becomes especially important to make sure the area provides the necessary amenities for everyday living. The most important aspect, though, is enjoyment. A holiday home is meant to be enjoyed. Make sure you enjoy yours for the longest possible time by making an informed decision. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)