How Do Levies Work at a Complex/Estate?
Category Article
Levies are regular payments made by property owners in a complex or estate to contribute to the shared costs and upkeep of the communal areas and facilities. Understanding how levies work is crucial for budgeting as a homeowner or investor. Here's a breakdown:
1. What Are Levies Used For?
Levies typically cover:
- Maintenance and Repairs: Upkeep of communal areas such as gardens, swimming pools, and pathways.
- Security: Salaries for security personnel, CCTV cameras, access control systems, and perimeter fencing.
- Utilities: Shared water, electricity, or waste management for communal areas.
- Insurance: Coverage for the building or complex structure, excluding individual contents within units.
- Management Fees: Payment for property managers or estate agents who oversee operations.
- Sinking Fund Contributions: A reserve fund for long-term projects or unexpected repairs, like roof replacements or structural fixes.
2. How Are Levies Calculated?
Levies are usually determined by the body corporate (for a sectional title) or homeowners' association (for freehold estates). Key factors influencing levy amounts include:
- Size of Unit: Larger units often pay higher levies.
- Facilities: Complexes with pools, gyms, or parks may require higher levies to maintain these amenities.
- Number of Units: Larger complexes may have lower levies per unit due to cost-sharing, while smaller complexes might distribute costs across fewer contributors.
3. Who Manages Levies?
Levies are overseen by the body corporate or homeowners' association. These entities ensure that funds are allocated appropriately and may increase levies annually to accommodate inflation or rising costs.
4. Special Levies
Sometimes, additional contributions (special levies) are required for unforeseen expenses, such as major repairs or upgrades. These are usually a once-off payment and may arise unexpectedly.
5. Consequences of Non-Payment
If levies are not paid, it could lead to:
- Legal action against the property owner.
- Restrictions on access to communal amenities.
- Complications when selling the property, as outstanding levies must be settled first.
6. Tips for Prospective Buyers
- Review the levy breakdown and financial statements of the body corporate or association.
- Ensure the sinking fund is adequately funded to avoid unexpected special levies.
- Compare levies in similar complexes to assess reasonableness.
Levies are an integral part of complex or estate living, ensuring shared spaces remain functional and appealing. Budgeting for these costs is essential for hassle-free property ownership.
Disclaimer: The information provided is for general guidance only. While care has been taken to ensure accuracy, Vermaak Properties does not accept liability for any errors or omissions, nor for any loss or damage arising from reliance on this content.
Author: Slate Volschenk