South Africans in these estates face levies worth tens of thousands, maintenance backlogs and low resale values

Experts have warned that unusually low levies can signal financially distressed sectional title schemes, exposing homebuyers to special levies worth tens of thousands of rands, maintenance backlogs and lower resale values.

South African homebuyers, under pressure from rising living costs, are increasingly filtering their property searches by levy amount rather than price.

However, Just Property CEO Paul Stevens warned that this shortcut could be steering them straight into an expensive real estate trap.

While it may seem tempting to choose a more affordable home, below‑market levies often mask financial trouble in a sectional title scheme.

“I understand why people do it,” Stevens said. “When every rand counts, a low levy feels like a win. However, a levy that looks like a bargain should make you pause.”

“Sometimes it means the scheme is well‑run. Other times, however, it’s a sign that the numbers aren’t adding up, and the real bill is still coming.”

Rising municipal rates, higher insurance premiums, ageing infrastructure and increased security and compliance costs in 2026 have made affordability a focal point for buyers.

As a result, a growing number are responding by prioritising low levies without understanding what those levies legally have to cover.

Calling it “false economy,” Stevens said this focus on short‑term affordability ignores the long‑term financial risk.

“A low monthly levy shouldn’t be celebrated; it should be questioned. When a body corporate keeps levies artificially low – whether to attract buyers or keep owners happy – they’re not saving anyone money.”

“They’re simply postponing the cost. And in property, delayed maintenance always comes back as a bigger, more painful bill.”

Under the Sectional Titles Schemes Management Act 8 of 2011 (STSMA), Stevens said that schemes must maintain two separate funds.

The first is an administrative fund for day-to-day operational costs, and the second is a reserve fund for long‑term capital repairs. The law also prescribes a formula.

“If the reserve fund balance is less than 25% of the previous year’s annual administrative fund, the body corporate has to allocate at least 15% of that admin budget to the reserve fund every year.”

Cheap levies can trigger special levies and lower property values

Stevens said many people are e shocked to learn that a 10‑year maintenance plan is actually mandatory under the STSMA.

“If a scheme doesn’t have one, that’s a red flag because it means that the trustees are probably not planning ahead, and that in turn means that the costs are going to hit owners sooner or later.”

However, he stressed that the funds formula is not red tape. It is really there to prevent schemes from collapsing financially.

“It forces trustees to plan for the big, predictable expenses – roofs, lifts, waterproofing, boundary walls – instead of scrambling when something breaks.”

“When schemes bypass these requirements to maintain the illusion of affordability, a capital emergency will be inevitable.”

Deferred maintenance eventually becomes visible in the form of peeling exterior paint, rusting balustrades, potholes in internal roads and malfunctioning access control systems.

All of these are signs that a levy is artificially low, Stevens said. The rising costs of replacement also increasing concerns about underinsurance.

“If a scheme is underinsured, owners could face a massive special levy after a fire, flood or storm because the insurer will only pay out proportionally.”

Under certain circumstances, underfunded body corporates will have no choice but to trigger Prescribed Management Rule 21(3)(a), which empowers trustees to implement a special levy.

This happens the minute a roof leaks, a boundary wall collapses, or a lift stops working, Stevens pointed out.

“Buyers who chose a property because of its cheap levy can suddenly end up with a mandatory lump‑sum demand for thousands, if not tens of thousands, of rands.”

The financial consequences do not end there. Banks routinely request the last two years of audited financials and the scheme’s 10‑year maintenance, repair and replacement plan (MRRP), he said.

“If the reserve fund is underfunded or the MRRP is missing, chances are that the bank will reject the buyer’s home loan application, even if the buyer has an excellent credit score.”

Poorly funded schemes also struggle in the resale market. “Properties take longer to sell, attract fewer buyers and often achieve lower prices, so a scheme with an underfunded reserve fund is a serious resale risk.”

How South Africans can avoid buying into financially distressed sectional title schemes

Stevens advised buyers to instruct their transferring attorneys or estate agents to obtain the following documents before signing an offer to purchase:

• The 10‑year MRRP: Confirm that the scheme has a current, written plan that tracks the lifespan and replacement costs of major assets.
• The reserve fund ratio: Review the audited financials. A scheme that follows the law will always maintain its reserve fund balance between 25% and 100% of its annual administrative budget.
• AGM minutes: Check whether owners have repeatedly voted down necessary levy increases or whether special levies are being discussed.
• Arrear levy report: High arrears often indicate cash‑flow stress, which could lead to the implementation of special levies.
• Insurance schedule: Ensure the scheme is adequately insured to cover current replacement values.

“A healthy levy protects your home, your bond approval and your resale value,” Stevens said. “It’s one of the strongest indicators of whether a scheme is being responsibly managed or not.”

“Choosing a home based purely on a cheap levy is penny‑wise and pound‑foolish. You’re not buying a number on a listing; you’re buying into a community’s financial health.”

According to Stevens, there are several telltale signs that a sectional title scheme is healthy. These schemes will typically have:

• realistic levies aligned with actual running costs
• a funded reserve account
• a current 10‑year MRRP
• transparent communication from trustees
• no pattern of rejected levy increases
• no history of repeated special levies
• adequate insurance cover

“South Africans are under pressure, and I get that,” he added. “It’s natural to look for affordability wherever you can.”

“But a levy isn’t a discount – it’s a financial indicator. If you understand what it’s telling you, you’ll make a far better decision. And in this market, that really matters.”