Sectional Title Scheme Levies: All You Need To Know

If you are looking to buy an apartment under a sectional title scheme, you will soon become familiar with the term: "levies". In this blog we unpack how levies work, what they cover, as well as some other frequently asked questions.

What are levies? 

Property levies refer to the fees and charges associated with owning property in a sectional title scheme. In a sectional title scheme, individuals own a specific section of a larger property (such as an apartment in a complex) and share ownership of common areas and facilities with other owners. The levies are used to maintain and manage the common areas and facilities.

What do levies cover?

Maintenance and repairs

This includes the upkeep of common areas like gardens, pools, hallways, and other shared facilities. It also covers repairs to the building's exterior, roofs, and common infrastructure.

Insurance

Property levies often include insurance coverage for the shared structures and common areas. This can include coverage for fire, structural damage, and other risks.

Security

Some property levies may contribute to security measures for the complex, such as access control, security personnel, and surveillance systems.

Utilities

Property levies might cover shared utility expenses, such as water and electricity for common areas.

Administrative costs

These costs can include management fees, legal fees, accounting expenses, and other administrative overheads related to running the sectional title scheme.

Reserve fund

A portion of the property levies may be allocated to a reserve fund, which is set aside for future maintenance and unexpected expenses.

How are levies calculated? 

Levies are calculated based on various factors related to the sectional title scheme, the property itself, and the expenses associated with maintaining the common areas and facilities. These include:

• Budget and expenses
• Size and complexity of the complex
• Unit Participation Quota (PQ)
• Common Property Ratio
• Amenities
• Location
• Reserve fund contributions
• Historical spending

The calculations are done more or less as follows:

1. The unit participation quota (PQ) or levy liability is determined for each section based on the above factors.
2. The total budgeted expenses are multiplied by each section's PQ to get the proportional share of expenses for that section.
3. Any additional costs such as exclusive use areas or special assessments are added.
4. The resulting amount is the annual levy contribution that the property owner is required to pay.

When are levies due and payable? 

This can vary based on the rules and regulations of the specific sectional title scheme, as well as the decisions made by the body corporate or homeowners' association. Generally, sectional title levies are due and payable on a regular basis to cover the expenses associated with maintaining the common areas and facilities. Payments can be made monthly, quarterly, biannually, or annually

What is a special levy, and why is it implemented?

Apart from regular levies, there might be instances when a special levy is imposed to cover unexpected or large-scale expenses that cannot be covered by the regular levies. Special levies are typically due on a specific date and are meant to address particular financial needs, such as major repairs or upgrades.

It's important for property owners to carefully review their sectional title scheme's management rules and regulations, as well as any communication from the body corporate or homeowners' association, to understand the specific due dates and payment requirements for sectional title levies.

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