Advice and Opinion

Levy calculations are stipulated by ST Act

There are many owners of sectional title properties who question their levy amounts, particularly in cases where they own garages or storerooms which add to their participation quota but do not consume services such as water or sewerage. They feel if they do not use the service for that area, they shouldn’t have to contribute to paying for it.

Another example is owners who own ground floor flats but eventually might have to contribute to a special levy for maintenance of the lift in the building. The question might arise that if the owner does not use the lift, why should be pay for it to be repaired or replaced?

But, says Michael Bauer, general manager of the property management company IHFM, these areas are included in the owner’s PQ factor of the scheme. This is the way it is prescribed in the Sectional title Act and while it may seem unfair, the way that the levies are worked out is still the most practical and fair way for any sectional title scheme, said Bauer.

Ordinary levies and special levies in sectional title schemes are covered in clause 32 (1) of the Sectional Titles Act, where is says that “Subject to the provisions of section 48, in the case of a scheme for residential purposes only as defined in any applicable operative town planning scheme, statutory plan or conditions subject to which a development was approved in terms of any law the participation quota of a section shall be a percentage expressed to four decimal places, and arrived at by dividing the floor area, correct to the nearest square metre, of the section by the floor area, correct to the nearest square metre, of all the sections in the building or buildings comprised in the scheme.

There will always be costs within a sectional title scheme that need to be divided among the owners and the allocation key has been provided by the Act, so that needs to be accepted by all owners of sectional title units, said Bauer.

“There has to be a standard formula for developments or chaos would ensue,” he said. “If each sectional title scheme had their own allocation keys, and changes might be made from year to year when owners decided to change things to suit themselves, eventually there would be major problems in ascertaining who was paying what and what percentage. All sorts of administration problems would creep in,” he said.

It also needs to be remembered that exclusive use areas also attract additional levies, said Bauer. These would include parking bays, garages, gardens, and enclosed balconies.

“If the total of the levies for a scheme is R1 million for a year, for example, and your PQ factor is 5%, you pay 5% of the total and this is divided by twelve to give equal monthly payments for the year, i.e. R4167 per month, and this amount will not change during that year,” said Bauer. “This is the most straightforward way of calculating what needs to be paid.”

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