Concern over excessive levies
NO EXTRAS These days, estate agents advising home buyers and buy-to-let investors on property will often recommend that they go for gated villages and security complexes. The reasoning behind this is that, as the crime rate remains high in South Africa, security complexes are likely to be better protected than freestanding homes — and will almost certainly appreciate in value at a faster rate. “This thinking is sound,” says Nancy Todd, from Rawson Property Group. “However, it has to be pointed out that many property buyers are now resisting sectional title opportunities because the monthly levies appear to be very high and, even more worrying, are possibly not justified.” Todd says that she had come across cases where the owners are paying levies of around R1 500 per month on units that command rentals of less than R5 000 a month. This means that a very high proportion of the landlord’s income is simply never received.
Todd adds that while it is true that levies of this size usually include the external maintenance of the building and the upkeep of the grounds, all too often they do not include any other worthwhile extras.
“In my experience, too-high levies often follow on the appointment of a managing agent… What we are finding is that a fairly small minority of managing agents will go in on what apparently seems a very low and reasonable fee, but will then add numerous extras which will make the remuneration excessive. By way of contrast, in our experience, good managing agents tend to charge higher but tend to be very reluctant to charge extras.
“It is time, therefore, that body corporate members started taking their trustees to task when they agree to excessive management fees.”