If you are considering buying a unit in a sectional title complex, one of the questions you should ask your property practitioner is what the monthly levy for the complex is.
Sectional title levies are used to defray the expense of all the external maintenance of the building, the upkeep of lifts, the gardens, the communal property, the gates, security and various other items. The benefit to owners is that they will have all the extras while paying only a portion of the running costs each month.
Buyers are often shocked at what they believe are high levies being charged. However, you need to calculate what it costs to live in a freestanding house with all the extras such as gardeners, garden maintenance, swimming pools, landscaping, electric fencing and a security guard at the gate. Once you have added up all these costs, it’s easy to see why high levies are necessary.
Low levies
Low levies may seem desirable but could be an indication of poor management in a sectional title complex.
Levies may be low for an apartment block because the body corporate has not worked out an adequate financial plan for the year ahead. This can result in special levies having to be raised to get urgent repairs or maintenance done. You will then have to take additional funds out of your household budget to meet these unforeseen costs.
A low levy could also indicate that certain maintenance items are being neglected because there are no funds available for carrying out repairs.
You need to be particularly careful when looking to buy into an older sectional title scheme, where more maintenance is usually necessary. Certain large budget items - a lift, for example - might need to be replaced in the near future.
Finances
When considering buying a sectional title unit, you need to assess the scheme's financial health carefully. Ask your estate agent for copies of the latest financial statements and check whether levies are being put to good use.
If you are applying for a bond, your bank will also ask for these, so check beforehand to be sure you will be buying into a well-managed scheme that is financially sound.
Writer: Sarah-Jane Meyer