EstateMate How to calculate your sectional title levies
Participation quotas, the admin fund and the reserve fund, worked through with a real budget.
Every month, every owner in a sectional title scheme pays a levy. Most owners never ask how that number is worked out, until it goes up. If you’re a trustee, you’ll be asked. Here’s how it works, with a real budget you can follow.
Who sets the levy?
The trustees draw up the budget. The owners approve it at the annual general meeting. Once the budget is approved, the total is split between the units, and that split is where most of the confusion starts.
The Sectional Titles Schemes Management Act (STSMA) and its regulations set the rules. The body corporate must keep an administrative fund for day-to-day costs and a reserve fund for future maintenance. Both are paid for through levies.
Participation quotas, explained
Each unit has a participation quota, or PQ. It’s a percentage, usually based on the floor area of the unit compared with the total floor area of all the units. You’ll find it on the sectional plan.
A bigger unit has a bigger PQ, so it pays a bigger share of the levy. All the PQs in a scheme add up to 100%.
The admin fund and the reserve fund
The admin fund pays for running costs: insurance, security, garden services, electricity for common areas, the managing agent’s fees and so on.
The reserve fund pays for the big-ticket items in the 10-year maintenance plan: a new roof, repainting, resurfacing the driveway. The regulations set a minimum contribution each year, linked to the size of the admin budget, until the reserve fund reaches the required level.
A worked example
Here’s a simple budget for a 40-unit complex.
| Line | Per year |
|---|---|
| Insurance | R180,000 |
| Security | R360,000 |
| Gardens and cleaning | R120,000 |
| Common-area electricity and water | R96,000 |
| Managing agent | R84,000 |
| Admin fund total | R840,000 |
| Reserve fund contribution | R210,000 |
| Total levy income needed | R1,050,000 |
Unit 12 has a PQ of 2.5%. Its share is R1,050,000 × 2.5% = R26,250 a year, or R2,187.50 a month.
Special levies
Sometimes the reserve fund isn’t enough, for example when a burst pipe turns into a new ceiling for three units. The trustees can then raise a special levy for that specific cost, split by PQ in the same way.
If you think your levy is wrong
Start with the trustees and ask to see the approved budget. If that doesn’t resolve it, the Community Schemes Ombud Service (CSOS) can help with disputes about levies and the way they’re calculated.