Costs to look out for when buying into a Sectional Title Scheme

levies in community schemes

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Category: Funding and Treasury

Costs to look out for when buying into a Sectional Title Scheme

Buying your first home is an exciting milestone, but it’s essential to approach it with eyes wide open, especially when considering a sectional title scheme in South Africa. While the allure of shared amenities and communal living may be appealing, there are hidden costs that first-time buyers often overlook, leading to financial strain and potential loss of investment.

One of the most significant oversights for new buyers is the responsibility for shared costs in community schemes, commonly known as levies, which are in addition to municipal and bond charges. Many financial institutions assess affordability based solely on bond repayments, leaving buyers ill-prepared for the monthly levy contributions required in a sectional title scheme. This oversight can lead to a domino effect, with owners struggling to keep up with payments, ultimately risking foreclosure and jeopardising the financial stability of the entire scheme. Understanding the breakdown of these shared costs is therefore crucial for prospective buyers.

What are levies?

Levies are monthly fees paid by sectional title homeowners, which typically cover a range of expenses, including maintenance of common areas, security services, insurance, and administrative fees. While these costs contribute to the upkeep and enhancement of the property, buyers must factor them into their budget to avoid financial strain down the line.

Furthermore, failing to pay levies on time can have far-reaching consequences beyond individual homeowners. A lack of funds can impact essential services and maintenance within the scheme, diminishing property values and detracting from the overall appeal of the community scheme. It’s a collective responsibility to ensure the financial health of the scheme, and each owner plays a vital role in upholding its integrity.

To avoid these pitfalls, first-time buyers must educate themselves on the true cost of sectional title living. Resources like TRACS offer invaluable guidance and education in multiple languages, empowering buyers to make informed decisions and navigate the complexities of community schemes effectively. By understanding their financial obligations upfront, buyers can protect their investment and contribute to the harmony and sustainability of the entire community.

Are there other costs besides monthly levies?

In addition to levies, there are other hidden costs that buyers should be aware of when purchasing into a sectional title scheme. These may include special levies for unexpected expenses or capital improvements, contributions to a fund for long-term maintenance projects, and fees for services not covered by the standard levies.

Transparency is key in ensuring that buyers have a comprehensive understanding of the financial commitments associated with sectional title ownership. Sellers and managing agents should provide clear documentation outlining all costs and obligations, allowing buyers to make informed decisions based on their individual circumstances.

While sectional title living offers many benefits, it’s essential for first-time buyers to approach the process with caution and awareness of the hidden costs involved. By educating themselves and seeking guidance from reputable sources, buyers can navigate the complexities of community schemes with confidence and safeguard their investment for years to come.

For expert advice on matters relating to levies, special levies and other costs in community schemes, reach out to our expert team today!