.avif)
Cheap levies could cost buyers dearly in 2026
- Low levies may hide underfunded schemes and costly financial problems.
- Special levies, declining values and bond rejections are growing risks for buyers.
- Healthy reserve funds and maintenance plans are vital indicators of a sound scheme.
Buyers under pressure are looking in the wrong place
With affordability under strain in 2026, many South African homebuyers are focusing on one number above all others: the monthly levy. But according to Paul Stevens, CEO of Just Property, that strategy could prove to be an expensive mistake.
As rising municipal charges, insurance premiums and living costs squeeze household budgets, more buyers are filtering their searches by levy amount before considering the overall health of a sectional title scheme.
"I understand why people do it," says Stevens. "When every rand counts, a low levy feels like a win. However, a levy that looks like a bargain should make you pause. Sometimes it means the scheme is well-run. Other times, however, it's a sign that the numbers aren't adding up, and the real bill is still coming."
Why 2026 buyers are particularly vulnerable
Rising costs have made affordability a major concern for homeowners. Higher municipal rates, escalating insurance costs, ageing infrastructure, security expenses and increasing compliance requirements have all pushed up the cost of running sectional title schemes.
Stevens believes many buyers are falling into what he calls a "false economy." By chasing short-term affordability, buyers often overlook what levies are legally required to cover and expose themselves to far greater costs down the road.
The hidden cost of 'Cheap' Living
"A low monthly levy shouldn't be celebrated; it should be questioned," warns Stevens.
"When a body corporate keeps levies artificially low, whether to attract buyers or keep owners happy, they're not saving anyone money. They're simply postponing the cost. And in property, delayed maintenance always comes back as a bigger, more painful bill."
Deferred maintenance eventually becomes visible through:
- Peeling exterior paint
- Rusting balustrades
- Potholes in internal roads
- Faulty access control systems
- Leaking roofs and neglected common areas
These are often warning signs that the levy structure is not sustainable.
Two funds are mandatory
Under the Sectional Titles Schemes Management Act (STSMA) 8 of 2011, everybody corporate must maintain two separate funds:
- Administrative Fund
Covers day-to-day operating expenses, including:- Security
- Cleaning
- Insurance
- Municipal charges
- Maintenance
- Reserve Fund
Provides for long-term capital expenditure and major repairs.
Stevens explains that legislation requires: "If the reserve fund balance is less than 25% of the previous year's annual administrative fund, the body corporate has to allocate at least 15% of that admin budget to the reserve fund every year."
He says many owners are surprised to discover that a 10-year Maintenance, Repair and Replacement Plan (MRRP) is also mandatory.
"A lot of people are shocked to learn that a 10-year maintenance plan is actually mandatory. If a scheme doesn't have one, that's a red flag because it means trustees are probably not planning ahead."
Special levies, bond rejections and falling values
Artificially low levies can have serious financial consequences.
- Special Levies
When major repairs arise and reserves are insufficient, trustees can impose special levies under Prescribed Management Rule 21(3)(a).
"Buyers who chose a property because of its cheap levy can suddenly end up with a mandatory lump-sum demand for thousands, if not tens of thousands, of rands," says Stevens.
- Bond Approval Risks
Banks increasingly scrutinise:
- Two years of audited financial statements.
- The scheme's 10-year MRRP.
- Reserve fund adequacy.
"If the reserve fund is underfunded or the MRRP is missing, chances are that the bank will reject the buyer's home loan application, even if the buyer has an excellent credit score."
- Declining Property Values
Poorly funded schemes often suffer from:
- Longer selling periods.
- Reduced buyer demand.
- Lower selling prices.
- Greater reputational risk.
"A scheme with an underfunded reserve fund is a serious resale risk," Stevens warns.
How to spot the trap before you sign
Stevens recommends that buyers ask their transferring attorney or estate agent to obtain the following before signing an offer to purchase (OTP):
The 10-Year MRRP
- Confirm that the scheme has a current written maintenance plan.
- Check replacement schedules for roofs, lifts and infrastructure.
Reserve Fund Ratio
- Review audited financial statements.
- Healthy reserve balances should range between 25% and 100% of annual administrative expenditure.
AGM Minutes
- Look for repeated resistance to levy increases.
- Identify discussions around pending special levies.
Arrear Levy Report
- High arrears can indicate cash flow problems and future financial pressure.
Insurance Schedule
- Ensure replacement values are adequate.
- Underinsurance can expose owners to massive unexpected costs after disasters.
What a healthy scheme looks like
According to Stevens, a financially sound scheme should display:
- Realistic levies
Levies should reflect actual operating costs rather than artificial affordability.
- A properly funded reserve account
Long-term maintenance should already be planned and financed.
- A current 10-Year MRRP
The maintenance plan should be updated and actively implemented.
- Transparent trustees
Owners should receive regular communication and financial information.
- Reasonable levy increases
Necessary increases should not be continually voted down.
- No pattern of special levies
Emergency funding should be the exception, not the norm.
- Adequate insurance cover
The scheme should be insured at current replacement values
A cheap levy is not a discount
Stevens believes buyers should view levies as one of the most important indicators of a scheme's financial health.
"A healthy levy protects your home, your bond approval and your resale value. It's one of the strongest indicators of whether a scheme is being responsibly managed or not."
He cautions buyers against making decisions based purely on monthly affordability.
"South Africans are under pressure, and I get that. It's natural to look for affordability wherever you can. But a levy isn't a discount, it's a financial indicator. If you understand what it's telling you, you'll make a far better decision. And in this market, that really matters."
For buyers in 2026, the cheapest levy on the property portal could ultimately turn out to be the most expensive purchase of all.
.svg)
