High levels of violent crime, robberies, home burglaries and hijackings are forcing people to abandon independent properties in favor of high-security residential complexes or properties.
While security complexes offer numerous benefits, such as increased security and well-kept public spaces, community life comes at a price, namely levies and taxes.
Homeowners living in complexes often complain that withdrawals are too high and, in some cases, increases of up to 65% have been reported.
Personal finance websiteJust Money.co.zaspoke with real estate experts about what is legal and fair and what owners can do if they feel their withdrawals are excessive.
What does Levie’s cover cover?
Every owner of a property or complex must pay a monthly fee to ensure the program is run efficiently and benefits everyone.
But homeowners don’t always know what their contributions cover.
“The levies cover everything known as common property. Anything outside your unit is part of that common property unless you have exclusive use of a portion of it, such as your garden, ”says independent real estate professional Sarel Ueckermann.
That means you pay for everything from water infrastructure and administration to gardening services and the bigger one: security.
Owners must take all of these charges into account when purchasing a unit in a property or complex.
“Withdrawals are a function of costs and costs are fully mapped into the budget for the complex, which is presented at the Annual General Meeting (AGM),” explains Trafalgar Property Management Chief Executive Andrew Schaefer.
“Costs are related to services and maintenance, so if you want to reduce withdrawals, look where you can reduce costs.”
Are withdrawals unfair?
Administrators may require owners to pay special fees to cover emergencies or extra work, such as when an elevator in a building needs to be replaced or a swimming pool is redone.
But some owners feel they are overburdened and may be reluctant to pay these taxes beyond their monthly contributions.
Special withdrawals may be withdrawn in certain circumstances, but may be limited in the future, thanks to the Community Schemes Ombud Service Act 9 of 2011 (CSOSA).
This law says schemes must set up a reserve fund to ensure there are sufficient savings to cover emergencies.
Unfortunately, schemes take time to accumulate reserves, which must be equal to the income earned by the scheme in the previous year.
“If you have a turnover of 1 million rupees, you have to have 1 million rupees in your reserve fund and keep it up,” says Ueckermann.
But he believes the act should have been phased in over time to help the owners, rather than implemented all at once, which caused some financial hardship for the owners.
Although administrators can pass a special tax regardless of how the owners think of it, there are ways to manage and control a scheme’s finances, Schaefer says.
It recommends owners to always participate in AGMs so that they can review the budget, make recommendations to reduce costs, and vote on important issues.
“Always insist on getting quotes, choose reputable contractors and consider installing cameras instead of having security personnel patrolling the property.”
According to Lauren Squier, an associate of Schindler’s Attorneys, directors don’t have absolute power.
“Members can limit trustees’ approval fees beyond R50,000 and require members to approve them at a special general meeting,” he says.
“There are ways to limit special withdrawals and control your investment as a member, but it is important to be reasonable in doing so as severely limiting administrators will affect the operation of the program.”
If you’re shopping in a complex, ask your real estate agent if you can review the minutes of general meetings, bank statements, city bills, and complex rules, advises Schaefer.
This will give you a good idea of whether you can afford to buy it.
“Do your homework, especially if you are a first-time homeowner. You don’t want to lose your home because you haven’t taken into account all possible costs. “
“Buying a property is generally a costly and long-term commitment,” says Shafeeka Anthony, JustMoney’s Marketing Manager.
“It is essential that you do your research and take into account all hidden costs and charges from the start. This way you know what to expect and can budget to avoid nasty surprises after signing on the dotted line.
Compiled byNarissa Subramoney