There are many advantages to investing and residing in a community that is governed by the Sectional Title Schemes Management Act, but buyers must have a good understanding of how sectional title developments are run before signing an offer to purchase.
This is according to Tyson Property Management’s property manager, Claudine Double, who says there are many pros and cons that buyers must consider and understand when they make the decision to invest in a sectional title.
“The benefits of living in a sectional title development are numerous. From being part of a safe, secure community to having access to gardens and recreational facilities that are maintained for you.”
However, she says these benefits come at a cost. Having to pay monthly levies for the convenience, while abiding by scheme rules, and not being able to make changes to your home, without trustee permission for example, may prove to be too much for some.
“In terms of the Act, sectional title developments are legal entities that must be managed by a body corporate.” The body corporate oversees the management of the development and for this they charge levies, which must be taken into consideration when calculating the affordability of the property you wish to purchase, she says.
Bodies corporate are responsible for ensuring that the financial, physical and administrative needs of the development are met.
They are made up of the owners in the development who elect trustees at their Annual General Meetings to manage the day-to-day operations. They also set scheme rules in place and ensure that residents adhere to them.
Double says before buying a property in a sectional title development, buyers must find out as much as they can about the development, or it could be a decision that they later regret.
First off, buyers must be clear on which section of the scheme they are buying, which common sections are shared with their neighbours, and whether they have any areas which are exclusively theirs.
“It is important to know exactly what areas and costs you are responsible for and what falls under the responsibility of the body corporate. This can be a tricky area in some schemes, and being knowledgeable can help you avoid disputes and unnecessary expenses,” she says.
Buyers must have a clear understanding of whether they will be paying levies, to just a body corporate or to a Homeowners’ Association as well.
Double says in the case of a buyer buying an apartment in a larger, gated estate which encompasses apartments, townhouses and freestanding homes, the Homeowners’ Association is established to oversee the running of the estate and for this they charge a levy.
The body corporate of the apartment block oversees the management of the block, and they too will charge a levy. These levy expenses are important to consider when calculating the affordability of the property, together with bond costs, rates, homeowners insurance and water and electricity costs.
She says prospective buyers should also place the Homeowners’ Association, body corporate or managing agent under scrutiny.
“Asking for a copy of the scheme’s financial statement is a great way of seeing whether levies are being paid, whether the scheme is putting the money to good use, and whether there is a healthy reserve of levies set aside for future projects and maintenance.”
If the complex you want to buy into is looking neglected and shabby, Double says it could be a sign that not all is well with the management team. Besides the obvious fact that you will be investing in a poorly maintained complex, the resale value of your home may be seriously affected in future years.
A large part of living in a sectional title is abiding by the scheme rules which are set in place to ensure acceptable behaviour by all the owners.
Double says prospective new owners must obtain a copy of the conduct rules and see how it will impact them. Buying a home in a non-pet friendly complex when you own three dogs, for example, can only lead to problems down the line.
Another issue that crops up often is that of parking. If you have a family with three adult drivers each owning a vehicle, but are only allocated one parking and one visitor parking, in terms of the scheme rules, this will become a point of great frustration.
Buyers need to be 100% sure of what they want, and be sure of whether they are ready to embrace both the pros and cons of being an owner in a sectional title scheme, she says.
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