SECTIONAL TITLE VS FREEHOLD: UNDERSTANDING THE REAL COST OF OWNERSHIP

by Taryn Davies Stevens • 6 MIN • 1268 Words

When purchasing a property, one of the first decisions purchasers face is whether to choose a sectional title property in a complex or estate, or a freehold home. A common concern is the monthly levy associated with sectional title ownership, with many purchasers viewing it as an additional expense. What is often overlooked, however, is that freehold properties also come with ongoing costs, many of which are simply paid separately rather than through a single monthly contribution.

Before comparing costs, it is important to understand the difference between sectional title and freehold ownership.

A sectional title property is a property where an owner purchases a specific section or unit, such as an apartment, townhouse, or cluster home, while sharing ownership of common property with other owners in the scheme. Common property may include gardens, roads, parking areas, lifts, recreational facilities, and security infrastructure. The scheme is managed by a Body Corporate, which is responsible for maintaining and administering the common property on behalf of all owners.

A freehold property, also known as full-title ownership, gives the owner complete ownership of both the building and the land on which it is situated. The owner is solely responsible for the maintenance, management, insurance, and upkeep of the entire property, subject to municipal by-laws and regulations.

Understanding the difference between levies, rates and taxes, and other property-related expenses can help purchasers make a more informed decision about which ownership structure best suits their needs, lifestyle, and budget.

In a sectional title scheme, owners pay monthly levies to the Body Corporate. These levies are used to maintain and manage the common property and shared services within the development. Depending on the scheme, levies may cover building insurance, security, garden services, cleaning of common areas, maintenance of roads and walkways, swimming pool upkeep, management fees, and contributions to reserve funds for future maintenance.

Bodies Corporate are legally required in terms of the Sectional Titles Schemes Management Act to maintain a reserve fund to provide for future maintenance and repair of common property. This helps ensure that funds are available for planned maintenance and can reduce the likelihood of unexpected special levies.

The levy generally includes insurance for the buildings and common property. However, owners remain responsible for insuring their household contents, personal possessions, and any improvements that may not be covered by the scheme's insurance policy.

Municipal rates and taxes, on the other hand, are payable to the City of Ekurhuleni and are based on the municipal value of the property. These charges contribute towards public infrastructure and municipal services such as roads, street lighting, waste removal, parks, and other community facilities.

A common misconception is that sectional title owners only pay levies. In reality, sectional title owners are liable for municipal rates and taxes relating to their section. Depending on the municipality and the scheme's billing arrangement, these charges may either be billed directly to the owner or recovered through the Body Corporate as part of the levy structure.

At first glance, a traditional freehold property may seem more affordable because there is no Body Corporate levy. However, this does not necessarily mean the overall cost of ownership is lower. In addition, many freehold homes situated within residential estates are subject to homeowners' association levies, which contribute towards security, maintenance of common areas, and estate management.

A freehold owner is solely responsible for all maintenance and repairs on the property, including roofing, exterior painting, boundary walls, driveway repairs, garden maintenance, security systems, and building insurance. When major repairs arise, the owner must fund the full cost.

In a sectional title scheme, many of these expenses are shared among all owners through the levy structure. This often makes budgeting easier and can reduce the financial impact of large maintenance projects. While levies are visible as a monthly expense, they frequently include costs that a freehold owner would need to pay separately.

One of the biggest advantages of sectional title living is shared responsibility. Owners contribute proportionately to the upkeep of common property, helping to spread costs across the scheme. Many complexes and estates also provide enhanced security features such as controlled access, perimeter fencing, surveillance systems, and on-site guards. Because these costs are shared among residents, they are often more affordable than arranging similar measures independently.

Sectional title ownership also offers convenience. Common-area maintenance, landscaping, and administration are typically managed by the Body Corporate, reducing the time and effort required from individual owners. For purchasers who prefer a lock-up-and-go lifestyle, this can be a significant benefit.

Freehold ownership, however, offers greater flexibility and independence. Owners generally have more control over renovations, extensions, and improvements, subject to municipal regulations and approvals. There are no Body Corporate rules governing day-to-day property use, and owners have complete discretion over maintenance schedules and service providers. For many purchasers, the freedom and privacy associated with freehold ownership are major attractions.

Many purchasers are unaware that owning a sectional title property often involves paying both levies and municipal rates and taxes. This is because the two charges serve different purposes. Levies fund the management and maintenance of the complex, while rates and taxes fund municipal services provided by the municipality. Depending on the development, utility charges such as water, electricity, sewerage, and refuse removal may either be billed separately or recovered through the Body Corporate. Purchasers should always review levy statements and municipal accounts before purchasing to understand exactly what costs they will be responsible for.

Purchasers should also be aware of special levies. A special levy is an additional contribution that may be raised by the Body Corporate when unforeseen expenses arise or when existing funds are insufficient to cover a necessary project. Examples include emergency roof repairs, major plumbing failures, structural repairs, security upgrades, or unexpected legal costs. Although special levies are generally unpopular, they are often necessary to protect the value, safety, and long-term sustainability of the development.

Another charge sectional title owners may notice is the CSOS levy. The Community Schemes Ombud Service (CSOS) is a statutory body established in terms of the Community Schemes Ombud Service Act to regulate and support community schemes throughout South Africa. It provides dispute resolution services, governance support, education, and oversight for sectional title schemes, homeowners' associations, retirement villages, and similar developments. The CSOS levy is payable by qualifying community schemes and is collected by the Body Corporate or homeowners' association before being paid to CSOS. Although usually a relatively small amount, payment is compulsory where applicable.

Purchasers should also familiarise themselves with the scheme's conduct and management rules before purchasing. These rules may regulate matters such as pet ownership, parking, alterations to units, noise levels, short-term letting, and the use of common property. Understanding these rules upfront can help purchasers determine whether the scheme is suited to their lifestyle and expectations.

When comparing sectional title and freehold properties, it is important to look beyond the monthly levy amount and consider the full cost of ownership. A freehold property may not have Body Corporate levies, but owners carry full responsibility for maintenance, insurance, and security. A sectional title property includes a monthly levy, but many of these expenses are shared among owners and managed collectively.

Before purchasing any property, purchasers should request levy statements, Body Corporate financial statements, details of reserve funds, copies of the conduct and management rules, and information about any planned special levies. Taking the time to understand these costs and obligations upfront can help prevent surprises later and ensure that the property aligns with both their lifestyle and financial goals.

For more property related information and guidance, contact INTRO REAL ESTATE, it’s the right choice.

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