Levies are proportionate of costs incurred in running or operating a body corporate, which have to be paid by the body corporate to its creditors. These costs typically include:
- Water, sewerage, refuse, and electricity consumed by the body corporate.
- Insurance premiums for the common property.
- Managing agent fees.
- Accounting and audit fees.
- Repairs and maintenance of the common property.
- Wages and salaries of the cleaners and other staff.
- Security.
- Landscaping.
These costs are paid by individual owners in the form of a monthly levy, calculated in accordance with the participation quota for their section. Some costs incurred in the upkeep of Exclusive Use areas can be recovered from the user of that area. In addition to the above, the body corporate is obliged to establish a reserve fund for future maintenance and unexpected expenses. The size of this fund is not specified in the Act, but a wise body corporate will make sure that the fund is adequate for the size of the complex and present condition of the property.
If the fund becomes excessively large, the Act does not allow any part of the excess to be refunded. However, the excess could be used to subsidize future levies or to improve the common property.
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Can the Body Corporate charge an additional amount other than the charges made by ESKOM for each individual meter of electricity used by a owner? When a charged is made in the overall levies for the use by the Body Corporate of electricity by items such as office equipment and the electricity pumps for swimming pool, and external lighting.
Hi,
Thanks for your email. There is nothing in the sectional title act saying otherwise. It is not unusual to recover a small admin fee for extra statements, meter reading, etc. and additional functions performed by the managing agent or any other supplier, i.e. pre-paid meter companies who charge between R15 to R30 per month surcharge w.r.t vendor fees.
However, those should be already worked in the levy budget as this is operating cost to the body corporate. The trustees may require to raise additional contributions and charge those costs directly back to the owners.
If the body corporate does perform the function itself, can they charge extra for performing this? I don’t think so.
This is actually is a very good question.
Hope this helps.
Michael
i have received a levy statement where my July 11 electricity came out to R1566, then i got charged R218.47 for “general electricity”, then another R42.99 for “basic electricity” AND another for the meter reading which is R8.09.
this is not normal…where can i find out what they are charging me for? when i spoke to my managing agent, she said, that is what the council is charging them! i doubt it.
also, for the forst time, i get charged R220.64 for water. my levy is still the same, please help…i am at my wits ends with these people.
Hi Ronelle,
Thanks for your email. It sounds excessive, but it is not unusual that you are charged for your direction consumption. However, the direct consumption is usually read on separate meters.
If you don’t have separate meters, the charges are recovered through the levies by the PQ factor.
In terms of the levies, the trustees propose a levy budget, which the owners approve at the AGM. So, if you have attended the AGM, you should be aware of the levy budget.
I suggest you contact the trustees directly. If you don’t get a satisfactory explanation, I would register a dispute according to prescribed management rule 71 and if necessary refer the matter to arbitration. Please bear in mind, there might be cost implications, but you will save in the long-run.
Hope this helps.
Michael
Good day
Firstly, thank you for informing the public!
I would like to query something with you. I purchased property in Pinehaven, Krugersdorp in March 2010. The Sectional Title Managing agents at the time was the famous CSTM…
The Levy was R876 for the first month, then I payed R1104. Now the Levy increased again by 10% bringing it to R1214.40. There would have been another increase on the R1104 for maintenance and repair work on the units but the owners decided to sort out their own maintenance to keep the Levy down, should any problems arise. (Just for information).
Out of everyone I know owning sectional tilte properties, our Levies are by far the highest. This is not my query though…
This is what my monthly statement from the managing agents include:
Monthly Levy
Unit Electricity (with meter reading)
Unit Water (with meter reading)
Basic electricity
General Electricity
Meter Reader fee
and then VAT on all of the above excluding the Levy.
Does this look correct to you? Also, Is the Water not supposed to be included in the Levy with Sectional Titles?
I am only trying to understand the proses better..
Thank you
Regards
Heino
Dear Heino,
Thanks for your email and your positive feedback. This is difficult to answer as it looks correct in terms of the billing. The levy is VAT exempt as this is not a service and the body corporate is not a VAT vendor. The other charges are vatable items.
It appears you have separate water and electricity meters and hence you are being invoiced according to your actual consumption.
Usually, most bodies corporate simply have a bulk meter supply and the water is then recovered according to the PQ. This is also unfair as some owner pay more than their actual usage and others pay less.
One has to question the cost per unit and the base cost. Is this the actual cost or is there a mark up on it?
Hope this helps.
Michael
Michael
Thank you for answering, yes it makes sence and I understand.
The water and electrical charges are based on the actual readings although you now and then get an estimate charge, which is normal.
The strange thing to me now is that both the previous two managing agents charged VAT on all the above mensioned escluding the levy, which is according to me correct, but the newly appointed managing agents only charge vat on the main Water and Electricity amounts?! I queried this with them and according to them it is correct. What worries me now is that if we are supposed to pay vat on the rest, and in this case we aren’t anymore, that it will catch up with us later. I did mention this to my body corporate as they are also uncertain and said they will take it up with the managing agents.
As you can tell I just want to do the right thing!
Once again, thank you!
Kind Regards
Heino
Dear Heino,
Thanks for your email. I suggest you keep a record of correspondence and in the trustees in writing about your concern. I think they should make sure that the account does reconcile.
Hope this helps.
Michael
our sectional title cottage which is in a holiday rental scheme, has recently got an administrator. The administrator has requested that the rental agent deducts our levies from our income. He was put there by owners because we had reason to believe the rental company was in breach & had acted fraudulantly yet he gave them instruction to deduct money from us directly.
Is it legal to allow the deduction of levies from rental income in a sectional title scheme?
The rental agency paid themselves for gardening & maintenance & security & fell into huge arrears with the municipal accounts. We have been unable to audit their books & have no idea where all the income went to .
our levy for a 2 bed cottage is in excess of R4k p.m. & the rental company own the garden , R & M , & security service companies as well as 2 ex directors own 43% of the estate.
PLEASE HELP!