Understanding Rates and Levies When Buying Property

When buying property in South Africa, there are additional monthly costs to plan for beyond your home loan. How these costs are structured depend on the type of property you purchase.

In simple terms, it comes down to sectional title vs free-standing homes, and whether your costs are partly consolidated through a levy or fully itemised on a municipal account.

Sectional Title (apartments and estates)

Monthly costs are split between a levy and municipal rates.

Levies (Body Corporate)

Your primary monthly expense, paid to the body corporate. It covers the shared running costs of the scheme:

Maintenance, repair and upkeep of common areas

Security and estate management

Building insurance

Administrative costs

Reserve fund contributions

Levies are approved annually at an AGM based on the scheme’s budget, and calculated according to your participation quota (PQ). In some cases, special levies may be raised to fund major or unexpected expenses.

Levies do not include property rates. These remain payable to the municipality.

Homeowners Association Levies (Estates)

Monthly fee to cover the costs of security, maintenance of common areas and shared areas, plus you pay your full rates/taxes and Elec/water to the municipality as per a free-standing home.

Rates and taxes

Charged by the municipality based on the municipal valuation of your unit. Set by the municipality, this value may differ from the current market value. Sectional title properties often attract lower rates due to their size.

Electricity, water and swer
Typically billed separately, either via prepaid meters or through the body corporate.

Free-Standing Homes (full title)

All charges are billed directly to the owner through a single monthly account, ie. a City of Johannesburg statement.

This fully itemised account typically includes:

Rates (based on the property’s value)

Refuse removal (fixed charge increased annually)

Water (usage based) and sanitation (usage based or fixed charge increased annually)

Electricity (usage based or prepaid)

Additional fixed charges, where applicable

Rates are calculated using the municipal valuation and a set tariff.

The key difference

Sectional title offers a consolidated approached and more predictable monthly costs through levies.

Free-standing homes give you transparency and control, but costs can vary based on usage.

When budgeting, it’s important to look beyond the purchase price and bond repayment to ensure long-term affordability.