In a sectional title property, such as a complex or an apartment building, levies play a crucial role in maintaining and managing shared spaces and resources. For owners, understanding what levies are, how they’re calculated, and why they’re essential is key to ensuring the smooth operation of their community. Here, we break down the essential aspects of levies in sectional title properties.
What Are Levies?
Levies are regular contributions paid by owners in a sectional title scheme to fund the maintenance, upkeep, and management of common property areas. These areas include shared amenities, such as gardens, pools, elevators, parking spaces, and other infrastructure that all residents have access to. Levies also cover essential services like security, waste removal, and insurance.
The levies are collected by the body corporate, the governing body responsible for managing and administering the scheme on behalf of all owners. The collected funds are then allocated to meet the budgeted expenses necessary for the upkeep of the communal property and to provide for the scheme's financial reserves.
How Are Levies Calculated?
Levies are generally calculated based on the estimated annual budget of the body corporate, which reflects the expected costs of maintaining the property over the year. This budget includes recurring expenses, such as utilities, insurance, and management fees, as well as planned maintenance and repairs.
The body corporate divides these costs among owners based on the unit's participation quota, typically proportionate to each unit’s floor area as a percentage of the entire property. This approach ensures that the costs are distributed fairly, with larger units typically contributing more than smaller ones.
Levies may also include contributions to a reserve fund, which is legally required to cover future, long-term maintenance and repair needs. This reserve fund helps to ensure that the scheme remains financially stable, avoiding the need for sudden, unexpected special levies in the event of major repairs.
Why Are Levies Essential?
Levies are essential for the upkeep and improvement of shared facilities and infrastructure. Without levies, the body corporate would struggle to fund necessary maintenance, which could lead to the deterioration of common property, reduced property values, and a decline in living standards within the community. Regular levy payments contribute to:
1. Preserving Property Value: Properly maintained common areas enhance the appeal of the property, which in turn maintains or even increases property values over time.
2. Ensuring Safety and Security: Levies fund security measures, safety inspections, and repairs that help create a secure living environment for residents.
3.Building a Financial Reserve: Having a robust reserve fund reduces the likelihood of financial shortfalls, ensuring that funds are available for future repairs and unforeseen expenses.
4. Creating Community Well-being: Clean, well-maintained spaces contribute to residents' comfort and satisfaction, promoting a sense of community pride and well-being.
Conclusion
Understanding how levies work in a sectional title scheme provides owners with insight into how their contributions support the community's quality of life and protect their investment. By working together through the body corporate, residents can maintain a well-run, attractive, and secure environment that benefits everyone.
At Maslow Realty, we’re committed to providing support and guidance to sectional title communities, helping them manage levies and maintain vibrant and thriving properties.
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