The lowdown on rates and levies
Every homeowner has to face the conditions of paying fees in the form of rates, taxes and levies. These are sums of money paid to the authorities that service your property.
How are rates and levies calculated in South Africa?
Rates and levies apply to all free-standing homes and sectional-titled properties. The market value of the property calculates them. This also includes any improvements or upgrades made to the property. If you own marketable land and no properties are built on it, you can still be liable to pay rates, as the municipality still has a valuation on that land.
The essential formula to calculate rates is by multiplying the market value of the property by the percentage that the municipal council has set. Rates are payable to the municipality every month. It covers land taxes and services such as water, road upkeep, sewerage, refuse collection, streetlight maintenance and general electrical infrastructure.
Levies are applicable to those who live in a complex townhouse, cluster estate development or a block of flats. Your levies are paid to a body and it is their responsibility to ensure that service delivery is met within the estate cluster or complex. When living in a gated estate or high-end luxury community, your levies will also go toward the upkeep or maintenance of common expenses.
This may include; walkways, pavements, ponds, gatehouses, play parks, access control guard houses and more. This ensures that all residents receive a fair opportunity to experience the same benefits that come with living in an estate. Body corporates who govern these estates consider an effective budget. This budget is approved by the members and fellow directors and communicated to residents.
What are stabilisation funds?
Retirement estates and other specific lifestyle estates have come up with a separate stabilisation levy fund. What does this entail? It usually requires the resident to make a once-off payment to the body corporate on the sale of the property. The payment amount is usually a percentage of the difference between the selling price of a unit between the time it takes for the purchase price of the property to be acquired.
Developers of certain estates may have specific provisions in place for levies contribution. Mixed-use schemes and estates with properties of different sizes may have different categories of levies. You should always research and thoroughly understand the levy structure of an area or sectional-title scheme before buying into your investment.
The importance of having your rates accounts up-to-date
Your quality of life is directly linked to having resources at your fingertips that make daily tasks easier. You are paying for the convenience of refuse removal, water running out of your taps, and a safe and secure neighbourhood with a clean, neat appearance. You mustn’t let your rates and levies bill fall into arrears. No one wants to live in a suburb where service delivery is below par. However, this is why it’s also essential to vote in your municipal elections. By voting, you are voicing your concerns on matters that directly affect you and would like to see improved.
REALGLEN Properties has a multitude of listings in different sectors for you to choose from. Whether you are thinking of investing in residential, commercial, industrial, retail or farms and small holdings, we have the property for you. Contact us today for more information on how the rates and levies will be taxed according to the property.