How to calculate your contributions to the reserve fund

LAST UPDATED: 25 May 2026

In the past, many bodies corporate did not adequately plan for long-term maintenance costs. This often resulted in owners being hit with unexpected special levies when major repairs suddenly became necessary.

Over the last decade, this has changed significantly. Since October 2016, bodies corporate in South Africa have been legally required to maintain a reserve fund. By 2026, this requirement is not only standard practice but a critical part of financial governance in sectional title schemes, especially given rising construction costs, higher municipal tariffs, and ageing buildings across many developments.

The reserve fund ensures that schemes proactively sets aside money for the maintenance and repair of common property, rather than reacting to emergencies.

Section 3(1)(b) of the Sectional Titles Schemes Management Act 8 of 2011 (“STSMA”) and its Regulations requires every body corporate to establish and maintain a reserve fund that is reasonably sufficient to cover the cost of future maintenance, repair, and replacement of common property. The intention of this legislation is to improve long-term planning, protect property values, and reduce the financial shock of unexpected special levies on owners.

In practice, however, many trustees still find it challenging to determine how much should be contributed to the reserve fund each year, especially in a cost environment that continues to shift year on year.

Regulation 2 of the STSMA Regulations provides the framework for calculating reserve fund contributions. The calculation is linked to the total contributions to the administrative fund (the operational budget of the scheme).

1. If the reserve fund is less than 25% of the administrative fund:
   The budgeted reserve fund contribution must be at least 15% of the total budgeted administrative fund contribution.
2. If the reserve fund is between 25% and 100% of the administrative fund:
   The budgeted reserve fund contribution must be at least equal to the budgeted repairs and maintenance amount in the administrative fund.
3. If the reserve fund is equal to or greater than 100% of the administrative fund:
   There is no minimum required reserve fund contribution, although ongoing maintenance planning is still expected.

It is important to clearly distinguish between the two funds:

This is specifically set aside for long-term maintenance and capital repairs of common property. Typical examples include:

• Roof replacements
• External painting
• Structural repairs
• Parking area resurfacing

This covers the day-to-day running costs of the scheme, such as:

• Security and cleaning
• Utilities and municipal services
• Insurance
• Management and administrative expenses
• Routine maintenance

A well-funded reserve account reduces reliance on special levies and allows schemes to plan upgrades in a structured, predictable way, which is something increasingly important in South Africa’s current economic climate.

With continued increases in building material costs, electricity and water tariffs, and ageing infrastructure in older schemes, many bodies corporate are finding that underfunded reserves quickly become a financial risk. A properly structured maintenance, repair, and replacement plan is essential for financial stability and protecting property values.

Even with a well-planned reserve fund, bodies corporate may still face urgent or unexpected maintenance requirements before sufficient funds have been accumulated. This is where alternative funding solutions can play an important role.

STS offers bespoke project funding solutions that enable schemes to proceed with essential capital upgrades and maintenance projects without delay. This helps complexes, estates and flats:

• avoid escalating damage and costs
• spread financial pressure more effectively
• maintain compliance and building standards
• protect long-term asset value

These solutions are designed to support financial sustainability while ensuring that necessary work is not postponed due to short-term funding constraints.

For more information on STS project funding solutions, download our brochure below.

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