South Africa’s 70,000 complexes face a governance gap

• South Africa has roughly 70,000 community schemes, yet fewer than 40,000 are registered with the regulator responsible for oversight.

• More than 30,000 disputes have been lodged in five years, exposing persistent governance and management weaknesses.

• Volunteer trustees often oversee multi-million-rand residential operations without formal training, creating governance risks for owners and residents.

A Housing model outpacing its governance‍

Community schemes, including sectional title complexes, estates, retirement villages and share blocks, have become one of South Africa’s fastest-growing housing models. They now form a critical part of the country’s urban residential landscape.

Yet the governance structures designed to regulate this sector are struggling to keep up.

According to data from the Community Schemes Ombud Service (CSOS), South Africa is home to roughly 70,000 residential community schemes. However, fewer than 40,000 are formally registered with the regulator, leaving a large portion of the sector operating outside the intended oversight framework.

This gap has appeared repeatedly in CSOS annual reports since 2017 and remains unresolved.

For Johlene Wasserman, the numbers point to a structural problem.
‍

“Trustees and directors in community schemes carry enormous legal and financial responsibilities, often without the training or support they need,” she explains.

‍

“CSOS data shows a sector that has grown far beyond the governance model it was built on. With almost half of schemes not registered with the regulator, it becomes increasingly difficult to maintain consistent standards or intervene early when problems arise.”

‍

The types of disputes driving the caseload

Over the past five years, more than 30,000 disputes have been lodged with CSOS. Annual volumes have climbed steadily, reaching over 16,000 cases during the 2024/25 reporting period.

While the regulator resolves around 80% of matters, the types of disputes have remained strikingly consistent.

Most cases relate to:

• Governance disagreements between trustees and owners

• Levy contributions and budget disputes

• Enforcement of scheme rules

• Access to financial and governance records

• Allegations of maladministration or poor management

‍

According to Wasserman, these conflicts are rarely caused by deliberate wrongdoing. “Most disputes aren’t about bad behaviour,” she says. “They arise from uncertainty, inconsistent processes and people trying to make complex decisions without the right governance tools.”

‍

‍Disputes rising, patterns unchanged

Despite regulatory reforms and improved oversight over the past decade, dispute patterns have not shifted significantly.

This suggests that the root cause lies not in enforcement alone, but in how schemes are governed on a day-to-day basis.

Community schemes have matured into sophisticated residential ecosystems, often managing large budgets, infrastructure, security and maintenance operations. Yet governance remains heavily dependent on volunteers.

Volunteer trustees managing multi million rand assets

A key pressure point repeatedly highlighted in CSOS reporting is the reliance on volunteer trustees and directors.

These individuals, typically owners within the scheme are responsible for managing what are effectively multi-million-rand residential businesses, often without formal training or professional accreditation.

This can lead to:

• Inconsistent rule enforcement

• Poor financial oversight

• Administrative delays

• Governance decisions taken without full legal or regulatory understanding

The result is uneven governance standards across the sector.

Big numbers, big risks

The financial scale of the community schemes sector continues to expand.

CSOS levy collections alone now exceed R400 million annually, reflecting the growing economic footprint of the industry.

Compliance among registered schemes typically sits between 70% and 80%, but the picture is far less clear among unregistered complexes.

For regulators and residents alike, this creates a growing risk.

‍

“Non-compliance is a major concern, particularly among unregistered schemes,” says Wasserman. “As the sector expands, governance failures at scheme level can expose homeowners to financial and legal risks.”

‍

Digital progress but uneven results

CSOS has invested heavily in digitisation in an effort to improve efficiency and transparency.

In November 2022 the regulator launched CSOS Connect, an online platform designed to manage scheme registrations, document submissions, annual returns, levy payments and dispute resolution.

The platform was intended to modernise the system and streamline administrative processes. However, industry feedback suggests that results have been mixed.

‍

“Yes, the regulator is stronger than it was a decade ago,” Wasserman notes. “But governance-related disputes have not declined. Despite new legislation, digital tools and stronger enforcement, the same issues keep surfacing year after year.”

‍

A sector that needs professional governance

For Wasserman, the sector has reached a turning point. Community schemes have become too valuable and complex to rely solely on volunteer governance structures.

‍

“We’ve reached a point where the system needs more than incremental fixes,” she says. “Community schemes have become too large, too valuable and too complex to depend solely on volunteers navigating statutory duties on their own.”

‍

The CSOS commitment to resolving disputes within 90 days remains an important safeguard. But long-term stability requires stronger governance at scheme level.

The practical solution

Drawing on her experience as a former CSOS official, Wasserman believes the most effective reform would be the introduction of a national competency standard for trustees and directors.

This would include mandatory, accessible governance training at the point of appointment.

‍

“A baseline qualification will not eliminate every dispute,” she says, “but it will immediately reduce avoidable conflicts, strengthen financial oversight and give residents confidence that their schemes are being run responsibly.”

‍

Professionalising governance would not only improve compliance, it would also prevent many disputes before they arise.

In a sector that houses hundreds of thousands of South Africans and manages billions of rand in property assets, that reform could prove essential to protecting the future of community living.

‍