FINANCE MATTERS
governed properly and the value of the owners units are determined to an important , perhaps crucial , degree by the quality of the management of the scheme .
The STSM Act provides a form of judicial management of a scheme to protect owners in case of maladministration , failure of the body corporate to perform its statutory duties or if it becomes unable to pay its debts . Aggrieved homeowners can approach the Community Schemes Ombud Service (‘ CSOS ’) which is responsible for ensuring that the conduct of parties within sectional title and community schemes is not in contravention of the STSM Act and that the scheme continues to operate for the benefit of all owners and that of the community environment . For the CSOS to carry out its function , it is incumbent on all sectional title schemes to pay a levy ( contribution ) over to the CSOS , failing which the members of the body corporate may be considered to be acting illegally and could expose homeowners within that scheme to quite hefty fines or even imprisonment for not paying their CSOS contributions .
Testament to the popularity of community living and perhaps sectional title ownership is the 2019 residential building activity indices where close to 60 % of the residential buildings that were completed in that year were flats and townhouses . This provides a unique opportunity for the affordable housing market , a distinct sector within the broader housing market that operates and is developed with specific aims in mind , the potential to expand into this space .
“ The body corporate becomes responsible for the enforcement of the STSM Act and the rules by which that specific scheme is managed .”
For the affordable housing market , a non-functioning body corporate would not only erode the property value of the homes of families / households on moderate income but it could render them more vulnerable if the dysfunctionality of the body corporate leads to a neglect in for instance maintenance , security or upkeep of common areas with the scheme . It may exacerbate inefficiencies in the transfer of properties and registration of the unit / s as security , contribute to the increasing undersupply of stock in the affordable housing market , result in a high credit risk of financing into that scheme and ultimately any prospects for the rehabilitation of a nonfunctioning body corporate or delict scheme may prove far too costly for homeowners .
The affordable housing market provides accommodation to a group of people who are an important part of the economically productive population of our country . Therefore to mitigate against the risk of dysfunctional body corporates , coordinated oversight by the CSOS and other key stakeholders is needed as this stands to offer the best possible defence and prospect for the growth of sectional title ownership within the affordable housing market .
30 NOVEMBER - DECEMBER 2020 SAAffordHousing saaffordablehousingmag SA Affordable Housing www . saaffordablehousing . co . za