Just Letting
The
levy
budget:
Getting it done right the first time
It is crucial that the levy budget is done correctly
T
here is one aspect of sectional title
management where ‘shortcuts’ must not be
taken and attention to detail must be spent;
this is the levy budget. While the Sectional Titles Act
does not stipulate that the budget must be itemised,
it makes good management sense to include as
much detail as possible.
While a simply laid out budget does not necessarily
make it wrong, it will create a lack of transparency.
If, for instance, at the annual general meeting,
the levy budget is presented with line items (for
example, accounts, audit, maintenance etc.) but
the maintenance amount is R500 000. The owners
in the scheme will want to know what the amount
was for, and will request an itemised breakdown of
the overly large amount. The best way to compile
a budget where one category can include a variety
of items is to list what each of the amounts are for:
pool, painting, building, plumbing, etc.
While the budget will show the regular annual
amounts needed for certain smaller items, there may
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Issue 7 2015
be one very large project that is being budgeted for,
such as a complete repaint of the exterior of the
building. Owners must be able to understand where
their levies are going and question the amounts, if
they feel these amounts are too high.
The most common items on the budget can be:
• Municipal services – water, electricity, sewage
and refuse removal
• Insurance - this is compulsory and the trustees
must check that the policy covers the buildings
and common property in full and is insured for
its current replacement value
• Maintenance