Blog Layout

Why Are Body Corporate Fees So High?

Aug 08, 2023

Understanding body corporate fees might seem complex, particularly when the numbers appear unusually high. With Neotrend Real Estate's experience in property management, we aim to simplify this topic and provide clear insights for South African property owners who are seeking clarity on what they are paying for.

Introduction

Body corporate Levies/fees are essential for maintaining the common areas of sectional title property, but why do these levies sometimes appear to be so high? The answer to this question is multifaceted, and in this blog post, we'll delve into the underlying factors that influence body corporate levies.

What are Levies?

These are monthly payments made by owners within a sectional title scheme to manage and maintain the common property according to their participation quota. They cover various aspects like monthly repair & maintenance, insurance, security, utilities, reserve fund, and administrative costs. But which items commonly drive these costs upward?

Some of the Reasons for High Body Corporate Fees

- Increasing Security Costs

- Maintenance Requirements

- Insurance Premiums

- Compliance with South African Laws and Regulations

- Reserve Funds

A Closer Look at What Drives Body Corporate Fees

  • Why do security costs affect body corporate fees?

    The need for safety and security in residential areas often necessitates hiring guards. As their salaries and associated expenses increase, this can become one of the most significant expenses for a body corporate, driving the overall levies/fees higher. The Private Security Industry’s fees in South Africa are regulated by The Private Security Industry Regulatory (PSIRA) Act and therefore there is not much room for negotiation with potential service providers.

  • How do complex maintenance requirements lead to higher costs?

    Buildings with extensive amenities such as pools, gyms, large gardens, generators, and elevators require constant upkeep. This can substantially add to the costs.

  • How does insurance affect body corporate fees?

    Making sure that the body corporate’s policy suits their needs, provides sufficient cover, and is fairly priced. Every 3 years according to Management Rule 23(3):- A body corporate must obtain a replacement valuation of all buildings and improvements.

    Owners are sometimes not aware as defined in the Prescribed Management Rule 29 (4) in the Sectional Titles Act that the owner who is claiming from insurance is the party who must pay the excess fee.

  • What role do South African laws and regulations play in determining costs?

    Meeting legal obligations can often incur additional costs, such as implementing safety measures and maintaining regulatory compliance.

  • Why are reserve funds a part of body corporate fees?

    According to the Sectional Titles Schemes Management (STSM) Act, all sectional title

    schemes are required to have a 10-year maintenance, repair, and replacement plan (MRRP)

    in place. Most trustees prefer to appoint an independent, experienced service provider to

    compile the 10-year maintenance and replacement plan for approval by owners at the next annual general meeting.

Conclusion

Why are body corporate fees so high? This is a question with complex answers. From compliance to maintenance, insurance, security, valuation, etc… the contributing factors can vary widely. At Neo Trend Real Estate, we believe in transparent communication and efficient management. We meticulously assemble our clients' budgets, incorporating a comprehensive level of detail. This serves to facilitate owners in their decision-making process during the annual general meeting. Reach out to our team to understand and possibly mitigate the costs related to your body corporate.

body corporate plumbing responsibilities
29 Jan, 2024
Explore the key roles and duties in 'Body Corporate Plumbing Responsibilities' within sectional title schemes with Neotrend Real Estate's expert guide.
What Does Sectional Title Insurance Cover
06 Nov, 2023
Discover what does sectional title insurance cover in South Africa. Our guide explains the protections for buildings, liability, trustee indemnity, and more. Understand the inclusions and exclusions to secure your property effectively.

Follow us on Instagram:

Share by: