If you intend purchasing a property in a sectional title scheme, you should always determine how much the levies are before you sign the offer to purchase. Educating yourself on what you are paying for and why will go a long way towards ensuring that the monthly levies are budgeted for and that there is no confusion as to what you, as a sectional title homeowner, are paying for.
Levies are part and parcel of sectional title living. These figures are not a thumb-suck of what the body corporate thinks you should be paying - levies are always calculated according to the Participation Quota (PQ) in the sectional title scheme.
"There are many sectional title property owners who question their levy amounts, particularly in cases where they own garages or storerooms which add to their participation quota but do not consume services such as water or sewerage," said Michael Bauer, general manager of the property management company IHFM. "They feel if they do not use the service for that area, they shouldn't have to contribute to paying for it."
Another example is those who own ground floor flats and who may eventually have to contribute to a special levy for maintenance of the lift in the building. The question might arise that if the owner does not use the lift, why should he pay for it to be repaired or replaced?
However, these areas are included in the owner's PQ factor of the scheme. This is the how it is prescribed in the Sectional Title Act and while it may seem unfair, this is still the most practical way any sectional title scheme has of determining levies.
Ordinary levies and special levies in sectional title schemes are covered in clause 32 (1) of the Sectional Titles Act, which states: Subject to the provisions of section 48, in the case of a scheme for residential purposes only as defined in any applicable operative town planning scheme, statutory plan or conditions subject to which a development was approved in terms of any law the participation quota of a section shall be a percentage expressed to four decimal places, and arrived at by dividing the floor area, correct to the nearest square metre, of the section by the floor area, correct to the nearest square metre, of all the sections in the building or buildings comprised in the scheme.
"There will always be costs within a sectional title scheme that need to be divided among the owners and the allocation key has been provided by the Act, so that needs to be accepted by all owners of sectional title units," said Bauer.
"There has to be a standard formula for developments or chaos would ensue," he added. "If each sectional title scheme had its own allocation keys, changes might be made from year to year when owners decided to change things to suit themselves. Eventually, there would be major problems in ascertaining who was paying what and what percentage was being paid. All sorts of administration problems would creep in," he said.
It also needs to be remembered that exclusive use areas attract additional levies, said Bauer. These would include parking bays, garages, gardens, and enclosed balconies.
"If the total levies for a scheme amount to R1-million a year, for example, and your PQ factor is 5percent, you pay 5 percent of the total and this is divided by twelve to give equal monthly payments for the year, i.e. R4167 per month, and this amount will not change during that year. This is the most straightforward way of calculating what needs to be paid," he concluded.