How trustees calculate and set levies: a step-by-step levy budget guide

Every month, a levy statement lands in the inbox of thousands of sectional title owners across South Africa. For many, it is a number they pay without fully understanding where it comes from, what it covers, or what happens if they stop paying. Understanding the levies meaning behind that monthly figure closes a gap that matters: once you grasp the logic of levy calculations, the whole system makes sense.

A levy, in the sectional title context, is every unit owner’s monthly contribution toward the shared costs of running their scheme. The Sectional Titles Schemes Management Act (STSMA) technically uses the word “contribution,” but in practice the industry uses “levy” interchangeably. It covers everything from security guards to roof repairs, from building insurance to managing agent fees. It is neither a fine nor a discretionary charge, it is your fair share of the community’s running costs, allocated by participation quota (PQ) based on floor area, as provided for under the STSMA.

At Solver Property Services, preparing, explaining, and defending levy budgets is one of the most time-intensive parts of our work. That tells you something: levies are central to a financially healthy scheme, and getting them right matters. This guide walks you through everything, from the legal definition through to calculation, enforcement, and a practical checklist you can use every month.

Levies meaning: what levies actually mean for South African sectional title owners

Because the STSMA uses the word “contribution” rather than “levy,” some owners are surprised to learn their payment has statutory force. What matters is the legal substance: a levy is a mandatory periodic payment imposed on unit owners by the body corporate. It is not a charge from the municipality. It is a charge from your own scheme’s governing body.

This distinction separates levies from municipal rates entirely. Municipal rates are charged by your local municipality, calculated on the assessed value of your property, and used to fund public infrastructure such as roads, sewerage, and street lighting. Body corporate levies are charged by the scheme and fund shared private costs like security, cleaning, garden services, building insurance, and managing agent fees. In a sectional title property, you pay both. In a freehold home, there is no body corporate levy, the freehold owner handles their own maintenance and pays rates directly to the municipality.

Trustees set the levy amount each year when they approve the annual budget at the Annual General Meeting (AGM). Every registered unit owner is legally obligated to pay. If you rent your unit out, that obligation does not transfer to your tenant. Whatever private arrangement exists in the lease, the body corporate holds you, the owner, responsible for every cent.

Monthly levies, special levies, and reserve funds: what is the difference?

Most owners are familiar with the monthly levy that appears on their statement. This is the administrative fund levy, and it covers the scheme’s day-to-day operational costs: security, cleaning, garden services, building insurance, managing agent administration fees, water and electricity for common areas, and audit fees. Trustees estimate these costs for the year ahead, total them up, and divide the amount among owners according to each unit’s PQ. It is recurring, predictable, and approved at the AGM.

Separate from the administrative fund is the reserve fund. The STSMA requires every body corporate to maintain a reserve fund specifically for future capital repairs, such as roof replacements, lift overhauls, or resurfacing of driveways. Each month, owners should contribute a portion of their levy toward this fund. A multi-year maintenance and repair plan typically informs how large the reserve fund needs to be. Underfunding the reserve is one of the most common financial mistakes in sectional title schemes, and the consequences arrive later as sharp, reactive special levies that blindside owners.

A special levy is a once-off or time-limited charge raised when an unexpected expense arises that existing funds cannot cover. The power of trustees to raise a special levy without a full AGM vote depends on the scheme’s own rules and the STSMA’s Prescribed Management Rules (PMRs), owners should review those provisions carefully, as some schemes require an owners’ resolution before a special levy can be imposed. Common triggers include burst/leaking pipes on common property, emergency roof repairs, or a large insurance excess after a claim. From our experience ay Solver Property Services, special levies generate the most friction between owners and trustees, which is why transparency around the reason and the amount is non-negotiable, it is simply good governance.

Levy calculation South Africa: how trustees build the levy budget

A levy budget is an income-and-expense forecast for the scheme’s coming financial year. The standard line items include utilities for common property (municipal rates and utilities for more info), building insurance, security and access control, landscaping and cleaning, managing agent administration fees, audit and accounting fees, bank charges, maintenance provisions, reserve fund contributions, and the CSOS levy.

Once the total annual budget is approved, it is divided among owners using each unit’s participation quota. The PQ is calculated as the unit’s floor area as a proportion of the total floor area of all sections in the scheme, expressed as a percentage to four decimal places. The formula works as follows:

Unit annual levy share = (Unit PQ ÷ Total PQ) × Annual budget Monthly levy = Annual share ÷ 12

To make this concrete: if a scheme’s total annual administrative fund budget is R240,000 and the reserve fund contribution is R60,000, the combined annual budget is R300,000. A unit with a 15% PQ contributes 15% of that total, R45,000 per year, or R3,750 per month.

CSOS levy calculation

The CSOS levy is applied to the administrative fund portion of each unit’s monthly levy. It is calculated at 2% of the amount by which the monthly administrative levy exceeds R500, capped at R40 per unit per month. In the example above, the administrative fund portion is R3,000 per month (15% of R240,000 ÷ 12). The amount above R500 is R2,500, and 2% of that is R50, which exceeds the R40 cap, so the CSOS levy is R40. The owner’s total monthly payment is R3,750 plus R40, which equals R3,790.

Solver Property Services prepares levy budgets on behalf of trustees across schemes in Gauteng, Cape Town, and KwaZulu-Natal, benchmarking line items against comparable schemes and identifying areas where costs can be reduced without compromising service levels. Accurate budget preparation from the outset reduces the likelihood of mid-year special levies and builds owner confidence in the scheme’s financial management.

When levies go unpaid: consequences and legal recovery

The collection process follows a predictable sequence. The body corporate issues a statement, then formal demand letters, and then hands the matter to either CSOS Specialists or attorneys for the collection thereof. Unpaid levies generally attract interest of up to 24% per annum where this has been authorised by a written trustee resolution under the Prescribed Management Rules. Legal and collection costs are added to the defaulting owner’s account.

One of the most effective enforcement tools is the transfer blockage. The Registrar of Deeds cannot register the transfer of a sectional title unit until all levy arrears are settled or adequately secured. This means an owner who wants to sell is stuck until the arrears are cleared. In serious cases, the body corporate can obtain a warrant of execution, attach movable assets, and pursue sale in execution of the unit itself if the debt remains unsatisfied. They can also apply to the courts to have the electricity of that unit disconnected.

The most common disputes trustees and managing agents encounter relate to the validity of a special levy, an incorrect PQ applied to a unit’s account, or interest charged at a rate not properly documented. Most of these disputes can be resolved through the Community Schemes Ombud Service (CSOS), which offers a cost-effective alternative to litigation. Accurate record-keeping of all levy resolutions, budget approvals, and payment histories is the first line of defense in any dispute.

A practical levy account checklist for trustees and owners

Every levy statement contains information worth checking. Running through a short checklist each month takes five minutes and can save you from paying incorrect amounts or missing errors that compound over time.

• The levy amount matches the budget approved at the most recent AGM for the current financial year
• The participation quota applied is the correct one for your specific unit
• Any special levy is supported by a valid resolution with a clear stated reason
• Interest charged on arrears is within the rate approved and resolved by the trustees
• The CSOS levy is separately itemised
• The reserve fund contribution appears as a separate line item, not merged with the administrative fund levy
• Any credit balance from advance payments is reflected correctly on the account

A professional managing agent reconciles each owner’s account regularly, issues levy clearance certificates for transfers, and flags arrears before they escalate into CSOS or legal proceedings. Solver Property Services manages levy administration across schemes in Gauteng, Cape Town, and KwaZulu-Natal, preparing compliant budgets, advising trustees on special levy resolutions, and implementing cost-saving measures that protect community funds without reducing service levels. For trustees who want accurate, transparent levy management without carrying the full administrative burden themselves, the right managing agent is the difference between a financially healthy scheme and a costly one. Get in touch with our team to find out how we can support your scheme.

Understanding levies meaning: a sharper view of your monthly statement

A levy is not a tax, not a municipal rate, and not a punishment. Understanding the levies meaning behind that monthly statement, that it represents every owner’s fair share of the cost of maintaining the community they live in, changes how you engage with your scheme’s finances. When levies are calculated correctly, collected consistently, and administered transparently, a scheme stays financially healthy and its residents stay informed. When they are mismanaged or ignored, the consequences range from deteriorating common areas to legal proceedings and blocked property transfers.

Use the checklist above, understand the three fund types, and know your participation quota. If the numbers on your levy statement ever don’t add up, ask questions. A well-run scheme always has answers, a competent managing agent always has the records to back them up, and proactive engagement with your levy account is one of the most practical things any owner or trustee can do.

Disclaimer: This article is for general informational purposes only and should not be considered legal advice. Community Schemes should consult professional legal advisors to ensure compliance with applicable laws and regulations.

Solver Property Services has managed community schemes since 2005 and combines property administration, financial expertise, maintenance oversight and compliance support in one hands-on service. Contact Solver to discuss your scheme’s needs and request a tailored property management proposal.