South Africans warned to think twice before buying a home in a sectional title or estate
Buying a home in a sectional title complex, gated estate, or managed residential scheme is a popular option in South Africa.
These properties offer convenience, shared facilities, and better security than freestanding houses.
However, Cliffe Dekker Hofmeyr (CDH) senior associate and real estate law expert Lutfiyya Kara warned that buyers need to think carefully before committing, as there are many extra costs that are often overlooked.
Kara explained that in a sectional title scheme, you own your unit but share ownership of the common property with other owners.
A body corporate manages the property, and owners must pay monthly levies to cover costs like cleaning, gardening, security, electricity in common areas, lift maintenance, building insurance, and administration.
“Levies vary depending on the scheme. Basic complexes might have low levies, while luxury estates with pools, gyms and 24/7 security can be far more expensive,” said Kara.
Additionally, since 2016, schemes have been required to plan for long-term maintenance, usually over ten years.
This is meant to reduce the need for sudden “special levies” for major repairs like roof replacements or plumbing work. But gaps in funding still happen.
“If the reserve fund is too small, trustees may raise levies or impose a special levy, often payable as a lump sum. These special levies can be very costly and are one of the biggest surprises new buyers face,” Kara said.
Other statutory and municipal charges also apply. Every scheme must pay into the Community Schemes Ombud Service (CSOS), and although the levy is relatively small, buyers should check how it is collected.
Municipal bills don’t disappear either. Some schemes bulk-buy electricity and water, charging residents through levies or prepaid meters, while others bill units individually.
“You need to understand how the scheme recovers these costs, and whether shortfalls are passed back to owners through extra charges,” Kara warned.
The more amenities a scheme has, the higher the monthly costs. Pools, gyms, landscaped gardens, and security guards all sound attractive but come with a price tag.
“Even if you don’t use the pool or gym, you’re still paying for it,” Kara said. Insurance is another factor. The body corporate insures the building and common areas, but owners must insure the inside of their own units.
In some cases, excess payments on insurance claims or shortfalls can be charged back to owners through levies or once-off payments.
Do your homework before purchasing
Buying into a scheme also comes with upfront costs beyond the usual transfer and bond registration fees.
These can include rates-clearance, settling any arrears on levies, admin fees for issuing compliance certificates, and sometimes a new-owner fee from the managing agent.
“A transfer cannot go through until a levy clearance certificate is issued, so these costs must be paid before the sale is finalised,” Kara explained.
Kara also pointed out that hidden costs can arise if owners fall behind on payments. “The body corporate can charge interest on arrears, add fines for rule breaches, or recover legal and collection costs,” she said.
Managing agent fees, auditor fees, and consultant charges can also push up levies if not well managed.
To avoid financial shocks, Kara advised buyers to do their homework before purchasing. She recommended asking for the body corporate’s latest financial statements and bank statements, the 10-year maintenance plan, and the history of levy increases.
Buyers should also check if any special levies have recently been imposed, review minutes of meetings, and look at the insurance schedule to understand cover and excesses.
“It’s also important to read the scheme’s rules, including restrictions on pets, rentals or renovations, and to review the managing agent’s contract for fees and termination clauses,” she said.
While scheme living has clear benefits, Kara emphasised that it comes at a cost. These schemes offer convenience and security, which is very valuable in South Africa.
“However, the reality is that levies and occasional special charges are the price you pay for that lifestyle,” she said.
She advised buyers to treat levies like a mortgage instalment: fixed, recurring, and unavoidable.
“Do your research, plan for the extra costs, and always keep a buffer for unexpected levies. That way, you can enjoy the benefits without being caught off guard.”
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