Understanding Sectional Title
Category Market Advice
Sectional Title living has been expanding in popularity over the last decade due to numerous reasons such as increased security, affordability and a more communal lifestyle. Despite its growing popularity, sectional title ownership is widely misunderstood with regard to responsibilities and legalities.
Freehold vs. Sectional Title
In order for you to completely understand the differences between sectional title and traditional freehold property ownership, we’ve briefly defined them:
‘Freehold’ or ‘full title’, refers to the complete ownership rights when you own a property; this includes the building itself and the land on which it is built. These types of properties include freestanding houses, cluster houses, residential property utilised for business purposes, and smallholdings. The owner is responsible for everything in and outside of their property. In comparison, ‘sectional titles’ or ‘cluster developments’ are governed by a Body Corporate (BC); this is the collective name given to all the owners of the units within any particular complex - the outside of your section/dwelling is their responsibility to maintain and to appoint contractors to do so. As an owner, you will be paying a levy, and part of that levy contributes to the cost of maintenance; you are therefore entitled to expect a delivery of service from the Body Corporate.
Sectional Title Properties
These kinds of properties refer to separate ownership of units or sections within a complex or development. When you purchase a sectional title property, you purchase a section or sections and an undivided share of the common property. Collectively, these are referred to as units, which appear most commonly as mini subtype houses, semi-detached houses, townhouses, flats or apartments as well as duet houses.
The Body Corporate (BC)
The Body Corporate is responsible for managing the scheme and taking care of its finances. A managing agent is usually hired to manage the duties of a BC; these include collecting monthly levies, paying the scheme’s insurance premiums, arranging meetings, and ensuring compliance with regard to the Sectional Titles Act.
Pros & Cons Of Owning A Sectional Title Unit
Pro - Increased Security
Living within close proximity to your neighbours provides a more communal environment, which is believed to be more secure than residing on a freehold property. In addition, most sectional title developments have excellent security surrounding the perimeter and at the entrance of the development.
Pro - Fixed Monthly Cost & Affordability
Instead of paying the complete cost of general maintenance, owners of sectional title units just pay a monthly levy instead. The levy includes insurance premiums, maintenance of the common property, wages and salaries of cleaners, security and other staff involved in maintaining the common property, as well as water and electricity required for it. On average, a sectional title unit within a complex is generally more affordable than a freehold house.
Con - Lack of Freedom
Owners need to comply with the rules and regulations laid out by the Body Corporate, whereas in a freehold property, owners have the freedom to make improvements to their property however they wish. Furthermore, these rules and regulations are subject to change.
Con - Liability for Debt of the BC
When you invest in a sectional title scheme, any debt that the Body Corporate incurs will make you liable to pay it off. Buyers should not purchase a sectional title property without seeing the financial statement of the BC; this should reveal any arrears that members may have incurred with regard to the levy payments.
As experts in our field, our experienced team at De Lucia Group is able to provide you with beneficial market knowledge and advice. We specialise in Kempton Park and surrounding areas.
Author: De Lucia Group