Sectional title levy calculator

This calculator works out what an owner in a sectional title scheme should be paying in levies, from the participation quota on the sectional plan and the scheme's budget. It shows the share of the administrative fund, the share of the reserve fund contribution, including the minimum the regulations impose when the reserve fund is low, the resulting monthly levy, and the owner's share of any special levy. It is for owners who want to check a levy increase or a special levy against the budget, for trustees setting the budget, and for buyers trying to understand what a unit will cost to hold.

Most levy disputes are not about the law. They are about whether the arithmetic was done, whether the budget supports the figure, and whether the reserve fund rule was applied. The calculator does the arithmetic so that the conversation with the trustees or the managing agent can be about the budget.

What this calculator works out and who it is for

You enter your participation quota as a percentage, the scheme's administrative fund budget for the year, the reserve fund balance at the start of the year, the reserve fund contribution budgeted for the year if you know it, the total of any special levy raised, and the number of units in the scheme if you want to see how your unit compares with the average. The calculator returns your annual share of the administrative budget, your annual share of the reserve contribution, your monthly levy, your share of the special levy, and whether the reserve contribution meets the regulation 2 minimum.

It assumes levies are apportioned by participation quota, which is the default under the prescribed management rules, and warns that a scheme's rules or a special resolution may apply a different basis for some costs.

How the calculation works

The participation quota is the percentage of the scheme that your section represents, calculated on the sectional plan from the floor area of your section as a proportion of all sections. Multiplying the administrative fund budget by your quota gives your share of the year's running costs: insurance, security, cleaning, gardening, common property electricity and water, the managing agent, repairs and maintenance of the common property, and the rest.

The reserve fund is separate. Regulation 2 of the Sectional Titles Schemes Management Regulations sets a minimum contribution each year that depends on how healthy the fund is. If the reserve fund at the end of the previous year is less than 25 per cent of that year's levy income, the contribution for the new year must be at least 15 per cent of the total levy budget. If the fund is between 25 and 100 per cent of the levy income, the contribution must at least equal the repairs and maintenance items in the budget. If the fund is at 100 per cent or more, no minimum applies. The calculator applies the first rule when you give it a reserve fund balance below the floor and no reserve budget, so that you see what the trustees were obliged to raise; if you enter the reserve budget, it uses that and warns if it is below the minimum.

Your monthly levy is your share of the administrative budget plus your share of the reserve contribution, divided by twelve. Your share of a special levy is the total special levy multiplied by your quota, payable in whatever instalments the trustees resolve.

The law behind the numbers

The Sectional Titles Schemes Management Act 8 of 2011, in force from 7 October 2016, governs how a body corporate runs its scheme. Section 3(1)(a) requires the body corporate to establish and maintain an administrative fund reasonably sufficient to cover the estimated annual operating costs, and section 3(1)(b) a reserve fund reasonably sufficient to cover the cost of future maintenance and repair of common property, in the amount the regulations prescribe. Section 3(1)(c) requires the body corporate to require owners to make contributions to those funds, and section 3(2) and (3) deal with how contributions are determined and when they become due. Prescribed Management Rule 21 in Annexure 1 to the regulations requires contributions to be levied in proportion to the participation quotas of the sections, unless the rules or a special resolution under section 11(2) provide otherwise for particular expenses, and allows the trustees to raise a special contribution for expenses that are necessary and were not budgeted for.

Regulation 2 is the reserve fund rule. It was the Act's answer to decades of schemes that ran on administrative budgets alone, had no money when the roof or the lifts failed, and then hit owners with large special levies. The rule forces every scheme with a thin reserve fund to put at least 15 per cent of its levy income aside every year until the fund is built up. The effect in the first years after 2016 was a levy increase in most schemes, and the rule remains the reason a well-run scheme's levy is higher than its running costs alone would suggest.

Levies are a debt owed by the owner to the body corporate and are due in advance in the instalments the trustees determine. Prescribed Management Rule 21(3)(c) allows interest on arrears at a rate the trustees set, capped by the National Credit Act's maximum. The body corporate may recover arrears through the Community Schemes Ombud Service or the courts, and section 15B(3)(a) of the Sectional Titles Act requires a levy clearance certificate before a unit can be transferred, which in practice means arrears are paid from the sale proceeds. The guide to disputing body corporate levies and the guide to CSOS dispute resolution deal with what to do when the levy is wrong or unpaid.

The participation quota also sets voting weight when a poll is called at a general meeting, and the share of the scheme's insured value, so a change to the quotas, which requires a special resolution and the consent of affected owners, affects more than levies.

Worked example

Lerato owns a flat in a 40-unit scheme with a participation quota of 2.5 per cent. The trustees have adopted an administrative fund budget of R1 200 000 for the year. The reserve fund stood at R100 000 at the end of last year. A special levy of R400 000 has been raised to repair the lift.

Her share of the administrative budget is 2.5 per cent of R1 200 000, which is R30 000 a year. The reserve fund of R100 000 is below 25 per cent of the levy income of R1 200 000, which is R300 000, so regulation 2 requires a reserve contribution of at least 15 per cent of the budget, R180 000. Her share is 2.5 per cent, R4 500 a year. Her monthly levy is R34 500 divided by twelve, R2 875. Her share of the special levy is 2.5 per cent of R400 000, R10 000. The calculator confirms the reserve minimum is built in and notes that a special levy may only be raised for necessary unbudgeted expenses and is apportioned by quota like any other.

If the trustees had sent her a levy statement of R3 400 a month, the arithmetic would tell her either that the budget is larger than the one circulated, that a different basis of apportionment is being applied, or that something is wrong, and that is the question to put to the managing agent. If the reserve fund had been R500 000, above the floor, no minimum would apply, and her monthly levy on the administrative budget alone would be R2 500, with the reserve contribution whatever the trustees budgeted for maintenance.

What the calculator does not include

It does not know your scheme's rules. Some schemes apportion particular costs, such as exclusive use areas, lifts serving only some sections or a different quota for commercial sections, on a basis other than the participation quota under a special resolution. If yours does, the levy statement should say so.

It does not calculate interest on arrears, legal costs or the collection commission a managing agent may charge.

It does not calculate the CSOS levy, a small statutory levy payable to the Community Schemes Ombud Service by every owner through the body corporate, which is added to the monthly levy.

It does not apply the second limb of regulation 2, where the fund is between 25 and 100 per cent of levy income and the minimum is the maintenance items in the budget, because that needs the line items.

It does not deal with homeowners' associations, which are governed by their constitutions rather than the Act, or with share block schemes.

When to get advice

Ask the managing agent for the budget, the audited financial statements and the reserve fund balance before disputing a levy; owners are entitled to them. If the arithmetic from the budget does not match the statement, write to the trustees. If the trustees will not explain or correct it, CSOS adjudication is designed for exactly this, is cheap, and does not need a lawyer. Get advice if the scheme has adopted a different basis of apportionment that you think is invalid, if a special levy was raised for something that should have been budgeted, if your arrears are being pursued with interest and costs you dispute, or if you are buying a unit and the levy clearance certificate shows arrears or a pending special levy.

Frequently asked questions

How are sectional title levies calculated? The body corporate adopts an administrative budget and a reserve fund contribution for the year, and each owner pays a share in proportion to their participation quota, usually monthly in advance. The quota is on the sectional plan.

What is the participation quota? The percentage of the scheme that your section represents, calculated from the floor area of your section as a proportion of the floor area of all sections. It sets your levy share and your voting weight on a poll.

What is the reserve fund rule? Regulation 2: if the reserve fund is below 25 per cent of the year's levy income, the body corporate must contribute at least 15 per cent of the levy budget to it; between 25 and 100 per cent, at least the maintenance items in the budget; above 100 per cent, no minimum.

Can the trustees raise a special levy? Yes, under Prescribed Management Rule 21, for necessary expenses that could not reasonably have been budgeted for, apportioned by participation quota and payable in the instalments the trustees decide. An owner who disputes one can refer it to CSOS.

Can levies be apportioned on a basis other than the quota? Yes, by a special resolution under section 11(2) or a rule, for particular expenses. Otherwise the quota applies.

What happens if I do not pay? Arrears attract interest at the rate the trustees set within the Act's limits, the body corporate can recover through CSOS or the courts, and a unit cannot be transferred without a levy clearance certificate, so arrears are paid out of any sale.

Who pays the CSOS levy? Every owner, through the body corporate, as a small statutory amount added to the monthly levy and paid over to the Community Schemes Ombud Service.