Sectional Titles And Freeholds: What's The Difference?

Houses, apartments, townhouses, duplexes... A property is a property, right? Yes, however, when it boils down to property ownership, it's not always as simple as that. 

If you are fairly new to the property market in South Africa, you've probably heard dozens of words and phrases that feel a bit daunting or unfamiliar: words like 'Sectional Titles' and 'freehold properties'. Are there any major differences between the two? 

As it turns out, there are - and they mainly come down to the ownership structure of the properties, and the rights and responsibilities of their owners. And so, choosing between the two will depend on your personal preferences, your current and future needs, and of course, your finances.

Let's take a look at some of the key differences between these two property types below:

Freehold Properties

A freehold property is a type of real estate ownership where the owner has full and absolute rights to both the land and any buildings or structures on that land. It is the most complete and least complicated form of property ownership.

Full Ownership

Owning a freehold property means that you have full and exclusive ownership of the land and the buildings on it. As the owner, you have the title deed for the entire property, and you can use, modify, and sell it as you choose, depending on your local zoning and land use regulations.

Independence

As the owner of a freehold property, you have complete control over your property and are fully responsible for its maintenance, repairs, development or renovations. There are no shared areas or common property that you would use with other owners.

Costs

As the sole owner of the freehold property, you would carry the full cost of maintaining and servicing your property, including property taxes, insurance, and utility expenses.

Sectional Title Properties

A Sectional Title property is a type of real estate ownership where the owner owns a specific section or unit within a multi-unit complex, like an apartment building, a townhouse complex, or a cluster of attached homes.

Ownership

In a Sectional Title property, you own a specific section or portion of a larger collection of units within a building. As an owner, you also own a percentage of the common property and common facilities, like parking areas, swimming pools, entertainment amenities, and gardens.

Regulations

There are usually specific rules, by-laws, and regulations in place to govern the use, maintenance, and alterations of sectional title properties known as the the STSMA (Sectional Titles Schemes Management Act) and the PMR (Prescribed Management Rule 23 (3). These rules are usually set by the body corporate and may restrict activities like pet ownership, renovations, or noise levels.

The Sectional Titles Schemes Management Act (STSMA) is legislation in South Africa governing the management and administration of sectional title schemes. It provides guidelines for the establishment, operation, and governance of these schemes, ensuring fairness and transparency for both owners and residents.

Prescribed Management Rule 23. (3) mandates that the body corporate of a sectional title scheme must insure all buildings and improvements within the scheme for their replacement value. This rule ensures that the scheme has adequate insurance coverage for its assets and liabilities, protecting the interests of all stakeholders involved. Compliance with PMR 23. (3) is essential for maintaining the financial security and stability of the sectional title scheme.

For more information, download our helpful PDF about our Sectional Titles & HOA Management Services. 

The Game-Changer? A managing agent.

Looking for a reputable agent to manage your Sectional Title on your behalf? Get in touch today to discover our range of property management services tailored for you. Let us take the hassle out of property management, so you can sit back and watch your investment flourish!