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16 Jul 2012


Residential Estate Entrance

Shocking, I know, my levy dropped by R136 for real. I was in shock. I have bought into the sectional title schemes from the year 2001 and I never got a letter that I received last month. At the best, my levy remained the same.

In reality, no favour was done for me and other homeowners. We paid more last year, thats all. The units are relatively new, and therefore require minimal maintenance. Most units are still owner occupied, which helps with the damage to the property. Owners take care of their investments than tenants in most cases. Knowing that its my money coming back didn't stop me from jumping with joy as I read-
During the recent meeting of the Trustees, the budget of the HOA was discussed in detail. It gives great pleasure to announce that the Trustees resolved to decrease the levies from 1 July 2012 as follows…
As usual I was scanning through the letter rushing to the bottom line. How much more will I have to part with exactly??? Geez, a decrease in levies, of more than R100 nogal. My guess is that we had excess in our savings/ scheme funds. These can’t be refunded to the owners according to the law, but can serve as a subsidy for future levies. And YES, I didn't attend the meeting, I was traveling.

Not to dampen this moment of excitement, but I have to mention that my security costs are shooting way up in two of my units. I’m installing trellis in one and paying about R500 extra levies for security guards in the other. When will this craziness end good Lord?

More on Levies or Homeowners Association Fee
A levy is an amount of money paid monthly by owners of sectional title residential property to themselves as a collection/ organisation. The levies are used to maintain and improve on the property. In South Africa the HOA fees or Levies, as we commonly refer to them, are quoted calculated in accordance with the participation quota for their unit which is usually according to the size of the property. Levies used to pay for Municipal rates and taxes among other things. Each owner pays the municipal rates with the municipality and pays the levies for the management of the sectional title scheme and:
    • Water and electricity used on the Common Property
    • Waste and Sewerage
    • Insurance premiums
    • Repairs and maintenance of the Common Property
    • Wages and salaries of the cleaners and other staff
    • Security
    • Savings fund for unexpected expenses
      Levies can be required for Free Standing properties in gated communities and boomed off areas. That is for security and we know we need a lot of that. In my next post I will write about the cost of security for property investors in SA today.

      With the new comfortable lifestyle, our levies also cover:
      • Swimming pools,
      • Tennis courts,
      • Community clubhouse
      • Neighbourhood parks and water features
      • Children play areas
      • Garages, gardens and parking areas 
      It is possible for Home Owners Associations to actually go bankrupt. In that case, it may be liquidated. This is a reason prospective home buyers should always investigate prior to buying into the sectional title scheme. Whether it’s a rental unit or for their own use.

      You should also investigate the levies to determine the affordability. The levies are just very high these days. That’s due to the cost of security. I pay up to R2500 for some units. This is inflated by security and the municipal rates and taxes.


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