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Residential

New retirement village offers fixed levy for life

Company announcement

13 November 2008

Fixed levy for life - a new sales tool to lure elderly buyers.

The Pieter Smith Property Group (PSPG) is developing a lifestyle retirement village in the Cape Winelands, with a fixed levy for life to give buyers peace of mind in an uncertain financial climate, says Brett Levine of PSPG's marketing division.

Levine says a major worry for many people considering moving into a retirement village is whether they will be able to afford future levies driven up by inflation, which will outstrip increases in their monthly pensions.

"PSPG has therefore adopted a proven financial model to give buyers on a fixed income the assurance that they will have a roof over their heads for the rest of their lives; that they will never have to pay a cent for the exterior maintenance, repainting or refurbishing of their homes or the common areas; and that they will receive a discount on the cost of health care for the duration of their stay at Vredezicht Lifestyle Retirement Village," he says.

In the first phase of development at the Wellington lifestyle estate, the monthly levy or service fee for nominated occupants of each unit will be fixed at R1 850 plus VAT. "This means that someone aged 55 years old could live in the village for 30 years, and at the age of 85 would still be paying R1 850 per month - the equivalent of about R300 in today's money," he says.

In each subsequent phase or when a unit is resold, the fee will be fixed for the new purchaser at a progressively higher amount, relative to increases in costs caused by inflation," says Levine.

The fixed service fee will cover insurance of all buildings; 24-hour security; rates and taxes in respect of the common property (not those relating to individual properties); common water and electricity charges; maintenance of gardens; provision of administrative staff to manage the village; management of the accounts; reception facilities; nursing assistance with dressings, medication, injections and so on; and a transport service for residents.

Levine explains that the operating company established to run the village will meet any shortfall between Vredezicht's income and expenditure each month. To recoup the shortfall and replenish the funds needed to keep the fixed service fee system going, about 30% of the profit from the resale of each unit will be paid to the company.

Vredezicht will be managed as a business, and not left to be run by an elected body corporate, to ensure greater accountability. He points out that while developers often leave with no further involvement after a retirement complex is built and sold, PSPG CEO Pieter Smith's interest in Vredezicht will continue as he has a 50% shareholding in the operating company that will own and maintain the health care centre and assisted living suites. Nick Baines, Smith's partner in the venture, has been involved in the management and operation of retirement villages for 20 years, and helped to pioneer the concept of fixed service fees.

The business model has been adapted at Vredezicht to allow people under the age of 55 - the mandatory minimum age for residents - to invest in the development, Levine says. "Younger buyers can put in a tenant of the required age, and charge a rental and levy as though it were an ordinary property investment. Their levy will be fixed at the prevailing rate when they move into the development."

Vredezicht will offer a relaxed country lifestyle likely to appeal to people who are young at heart and looking for a change after years of living and working in the city, as well as retired people from local farming families.

He points out that the historic town of Wellington has similar amenities to nearby Franschhoek and Stellenbosch, without the high price tags. "Wellington is a thriving wine-producing hub, with numerous activities such as golf, tennis, bowls, fly-fishing, bird-watching, hiking and scenic walks, within easy reach. There are also art galleries, historic sites and many restaurants in the area."

Set around a lake and with views over the valley, hills and surrounding mountains, the development will include a meadow with over two kilometres of meandering walking trails. A clubhouse will also be built where residents can socialise, watch movies and sport, and attend functions. Facilities will include a bar, a restaurant with deck overlooking the lake, and a library, as well as a salon and a gym.

In addition, communal braai and pool areas will be provided. "We believe Vredezicht will attract younger residents who enjoy an active lifestyle, and envisage that the average age will be 60 to 65."

The security village will comprise 280 units in total, with three types of architect- designed units available: luxurious two- and three-bedroomed freestanding homes on the perimeter of the village, with large north-facing gardens; two- and three-bedroomed attached homes facing onto landscaped areas, including the meadow and the lake; and compact studio, and one- and two-bedroomed sectional title apartments. In addition, assisted living suites and a frail care facility will be provided.

"The architects have put lots of thought into the design: for example, there will be no stairs anywhere in the development," says Levine. "Although the apartments will be built on two floors, they have utilised the slope of the land to provide direct access to all units from ground level."

Each home will have a base price, and residents may then select one of three individual pricing options for their interior finishes, which will be added to the base price. "Short of breaking down walls, residents may customise their living space as they please."

The base prices of units start from R495 000 for a 31,5m² studio apartment, plus finishes ranging from R20 000 to R60 000. The attached homes start at R 1 270 000 for a 91m² two bedroom, one bathroom unit, with finishes priced from R60 000 to R120 000. At the top of the range are deluxe freestanding three-bedroom, two bathroom homes with gardens, available at prices of up to R1 990 000 for a 151,6m² unit, plus finishing options ranging from R50 000 to R150 000.

The civil works at Vredezicht have commenced. Construction of the first phase, comprising 47 homes of all three unit types and the clubhouse, is scheduled to start in the new year, with transfer of units expected to take place at the end of 2009, Levine says.

The public launch of the first phase will be held in Wellington, just 25 minutes' drive from Cape Town's northern suburbs, on 6 December 2008 (from 9am to 12 noon) and 7 December 2008 (from 2pm to 5pm) (http://www.vredezicht.co.za/).

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