Does Evergreen’s Life Right model offer the perfect retirement lifestyle?
26 Jul 2017Blog
If you’d prefer to listen to Arthur Case, CEO of the Evergreen Group, discuss the Life Right model, listen to the audio clip below:
What are the major constraints that today’s middle market retirees face?
This market is naturally looking for assurances about their long-term financial security, about maintaining independence, managing health, avoiding loneliness and being safe and carefree. Life becomes enjoyable if you have freedom from these stresses and the ability to manage the future well. The converse also applies. Many seniors are more afraid of living than they are of dying. It is difficult, even impossible to relax when you are concerned about income, expenditure, savings, your health and security.
Do you believe that the Evergreen Life Right model has the most to offer?
Most property owners in retirement sell to downsize to more manageable and secure accommodation; the kind that offers appropriate facilities and services which allow for a sustainable lifestyle in light of retirement income and goals. Those who recognise the benefits of security village living must weigh the merits of a Life Right versus a Sectional Title or Freehold purchase.
To many, their home is their primary investment and must deliver the value they need in order to fund their retirement years. Many find that buying small is expensive and that the capital freed may not sustain their lives. Uncertainty breeds concern. They fear that inflation will leave them financially stressed when they are at their most vulnerable. Independence is – in my opinion – the second consideration. Will my health hold? Will I be able to take care of my spouse and myself as we age and who will look after us when we are no longer able to do so?
Evergreen has something to say to these people. And to those who simply want to enjoy retirement living to the max.
Why do you believe Life Right holds an advantage over sectional title?
Think about the value chain. The Sectional Title village developer carries no incentive to build or manage communal, residential and operational components with cost efficiencies and sustainability in mind. Once the village is built, the developer walks away. A managing agent looks after village maintenance and management – his costs and profits are covered by levies.
Should the village residents require specialist facilities such as frail care units – or upgrades to aspects like buildings and security, residents need to raise capital via special (unplanned for) levies. The loudest voices on the body corporate aren’t often the wisest and the headaches and challenges of village management become an unwelcome burden to the residents.
In our unique Life Right model the interests of Evergreen and those of our residents are aligned: All village facilities including the homes remain an asset of Evergreen. Evergreen Lifestyle Villages (Pty) Ltd keeps village finances and levy inflation in check, and communal facilities and gardens in pristine condition. Owners enjoy a legal right to occupy their homes for life, and their life right gets sold as part of their estate. The value it fetches for their estate will depend upon the state of the home and the reputation of the village. Our brand reputation depends on resident satisfaction and the quality of our environments. We invest heavily in providing quality health and frail care, security, top-class hospitality, and maintenance. Our goal is to cover operating costs and not to make a profit from levies. Levies are established two years in advance and there are no other costs! Everyone wins in this model.
How does Evergreen’s Life Right approach help to overcome the financial constraints many retirees face?
When we sit down with buyers, we have the flexibility to tailor-make their purchase according to their financial circumstances and goals – in some instances, reducing the purchase price to match the capital they wish to commit to purchasing a home. In this way they are able to free the capital they need to support their lifestyles. The difference between the market value of the home and what they wish to pay is offset by an agreed reduction of the capital return on the termination of the life right.
Surely a lower capital value will reduce the value of one’s estate?
The world is changing: people live longer and the idea of being able to leave your home as a legacy is not practicable and certainly not even sensible for many people to entertain. Having sacrificed greatly for the education and support of their children, enjoying life, remaining independent and not becoming a burden to ones’ children require a plan.
Having invested in making your home your prime asset you must make it work for you.
In this sense a Life Right purchase is the perfect lifestyle product – everything you want from retirement, structured to suit your pocket for the duration of your and your spouse’s lives. Also, a Life Right purchase means no transfer duties or VAT is payable. To me it is no surprise that similar life right schemes are so popular overseas, nor that their popularity is gaining pace locally. It is an excellent product for our market.
What would you say to prospects about Evergreen’s Life Right model
Moving to Evergreen should be a very smart move in terms of one’s cost-of-living. Also, the lifestyle with its vibrant sociability, security, health care and affordability is extremely valuable. The alignment of everyone’s interests means that we are striving towards common goals. You’ll experience something profound – the collective spirit within the village communities is extraordinary, people are having the time of their lives, living as we really should. This is the secret to a stress – free, fully supported and enjoyable lifestyle, and it is perfectly aligned with the constraints, needs and goals of a large portion of today’s retirement market.