Low levies not always a good thing

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11 Feb 2013

In all sectional title developments, as a purchaser, one of the first questions most asked is what the levy is. 

Steward says a low levy is not always necessarily a good thing.

This is according to Lanice Steward, managing director of Knight Frank Anne Porter, who says buyers tend to compare the costs of different apartments with the levies but this can be a dangerous approach.  

She says a low levy is not always necessarily a good thing. 

Some people looking at the top-end luxury apartments are often horrified at the levies being charged, but they need to sit down and do the exercise of calculating what it costs to live in a freestanding house with all the extras such as garden maintenance, swimming pools, landscaping, electric fencing, a security guard at the gate, etc.  

People are often taken aback with the high levies but if all of the incidentals are added up it is easy to see why these are necessary. The benefit of this is that a buyer will have all of the extras and only pay a portion of the cost of running these each month. 

Steward says one must remember that the levy includes all the external maintenance of the building, the upkeep of the lifts (if there are any), the gardens, the communal property, the gates, security, and much more. 

An apartment block might have low levies because the body corporate has not done the necessary financial planning for the year ahead, she says, and this can lead to special levies having to be raised in order to get much needed repairs or maintenance done.  

A low levy could also mean that certain things are being neglected because there are no funds available to carry out the repairs. 

This is of particular importance when looking to buy into an older block, where more maintenance might be necessary and where replacement of certain large budget items (such as a lift) might be needed down the line, she says. 

When looking to buy, the financial health of a scheme should be assessed carefully, says Steward.  

She says ask the agent for copies of the financial statements and check whether the levies are being put to good use. “The banks will also ask for these if the buyer is applying for a bond so it’s best to check beforehand and be sure that you’re buying into a financially sound scheme.”  

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