Demystifying Sectional Titles

Sectional title complexes are very popular, both with homeowners and property investors. There are several reasons for this surge in popularity, which we will outline below, as well as some of the things to watch out for before buying into one.

So, what exactly are sectional titles? A sectional title refers to the ownership of a unit or section within a complex or development. This includes the dwelling, as well as a non-divisible share of the common areas. All this means is that everyone who owns a unit in the complex also owns part of the common areas, but they cannot be divided up. 

When you invest in a sectional title you automatically become a member of the Body Corporate. This gives you a say as to how the complex or development is run, and how levies are calculated and spent. Levies are put in place by the Body Corporate to cover the insurance of certain areas, maintenance of common areas, security and salaries of staff that maintain and protect the property. 

One of the obvious benefits of living in a complex or secure development is security, especially considering South Africa's high crime rate. Complexes are able to employ security guards and implement access control, adding another level of safety beyond the high walls, with the cost of security being split among all of the owners through the levy. 

Complexes offer a sense of community, with residents living in enclosed villages, rather than isolated behind the walls of their freehold property. Residents have the benefit of communal areas to socialize with other residents without ever having to leave the security of the development. Some complexes even come with swimming pools, tennis courts and other amenities, all paid for and maintained by the levies. 

Buying into a sectional title is often cheaper than a freehold home, which makes it a great way for first time buyers to get onto the property ladder. 

A well run sectional title also offers more predictable monthly expenditure, with the set levies covering certain costs. It is important to make sure the sectional title that you are investing in is well run. South African law dictates that Body Corporates must keep proper financial statements, so have those checked before you buy. Asking to see the minutes of the last AGM as well as the management and conduct rules give you insight into how the complex or development is run. 

Special levies often crop up if the Body Corporate doesn't plan for upcoming expenses properly, so if these happen frequently, take that as a warning sign. If the funds are correctly administered, you should get advance notice of the occasional Special Levy and be able to budget accordingly.

Buying into a sectional title does mean less independence than what you would get in a freehold.  The majority rules and if the Body Corporate decides on something, there's no easy way to change that. There will be rules and regulations on all sorts of things such as noise levels, pets, visitor curfews and use of communal areas. 

Investing in any sort of property is a big commitment that needs to be carefully researched before taking a decision. Choosing to purchase a sectional title is not without risks, which is why you need the experts on your side. Speak to Maxprop before you buy and take our six decades of experience to ensure your sectional title purchase is executed smoothly.