The non-payment of levies has quietly become one of the biggest threats to property values in South Africa. Here's what's happening — and who's carrying the cost.
When Stratafin began analysing sectional title schemes across South Africa in 2014, levy non-payment sat at around 5%. A manageable figure. A small minority of owners falling behind, recoverable through normal legal processes.
Today that number is between 25 and 30%.
One in three sectional title owners is not contributing to the maintenance and running of the scheme they live in. The other two are carrying them.
This is not a niche problem affecting a handful of poorly run complexes. It is a nationwide crisis playing out quietly across hundreds of thousands of schemes — in suburbs you know, in buildings that look perfectly fine from the outside, in complexes where the gardens are still neat and the security boom still works.
For now.
Why Are So Many People Not Paying?
The reasons are layered and, in many cases, genuinely understandable.
South Africa's economic climate has placed enormous strain on household finances. For many owners, the monthly levy has become what Willie Roos — CEO of Stratafin and one of South Africa's leading sectional title experts — calls a grudge payment: the last bill to be paid when money is tight, or the first one dropped when it isn't enough.
There's also a knowledge problem. Sectional title has grown dramatically — the number of schemes in South Africa has reportedly doubled in the last decade, from around 60,000 to 120,000. Many of the people buying into these schemes have never owned sectional title before and genuinely don't understand that levy payment is a legal obligation, not a subscription they can cancel.
And then there's the smaller scheme problem. The fewer units a scheme has, the higher the levy per unit tends to be — because fixed costs like security, management, and maintenance are divided among fewer payers. In some smaller schemes, levies on a modest one or two-bedroom unit can feel disproportionately high relative to the property's value. That perception — whether accurate or not — makes owners more likely to deprioritise payment.
What Happens to the Scheme When Levies Go Unpaid
The consequences don't announce themselves dramatically. They accumulate.
Maintenance gets deferred. The roof that needed attention last year doesn't get it. The lift that's been intermittent for months gets a temporary fix instead of a proper repair. The exterior painting that was due gets pushed to next year. Things that cost a modest amount to address when they first arise cost significantly more when they've been ignored.
The municipal account falls into arrears. The body corporate pays a single bulk account to the municipality for water and electricity in many schemes. When levy income drops, the body corporate's ability to pay that account drops too. If the account falls sufficiently behind, the municipality can disconnect services — not to the non-paying owner, but to the entire scheme. Every resident loses water or electricity, regardless of whether they've paid every levy on time.
Special levies get raised. When the scheme needs money it doesn't have — for deferred maintenance, for a municipal arrears account, for emergency repairs — the trustees raise a special levy. This is an additional charge to all owners, calculated in proportion to their Participation Quota. It is not optional. Compliant owners absorb costs created by non-compliant ones.
The scheme's value deteriorates. A complex that isn't being maintained loses its appeal to buyers and tenants. Fewer people want to buy there. Those who do offer less. The owners who have paid their levies faithfully watch the value of their investment erode — not because of anything they did, but because of what others didn't do.
What the Law Allows — and What Actually Happens
The body corporate has significant legal tools to recover unpaid levies. The process moves from letters of demand to summons to judgment to attachment and — ultimately — sale in execution of the unit.
In practice, Stratafin's model works as follows: they advance funding to the scheme, removing the immediate financial pressure, then pursue the outstanding levy through the courts. The full process — from issuing summons to sale in execution — takes approximately 24 to 30 months. The recovery rate is 100%.
But 24 to 30 months is a long time. In the meantime, the scheme is operating on reduced income. Maintenance decisions are being made around what the body corporate can afford, not what the building actually needs. And every owner in the scheme is living with the consequences.
The Devastating Math of Waiting Too Long
Here is what most non-paying owners don't fully reckon with until it's too late.
When a unit is sold in execution — through the sheriff's court process — the purchase price at auction can appear remarkably low. But that low price is not a windfall for the original owner. It is a catastrophe.
If the auction price doesn't cover the outstanding bond, the bank can pursue the owner for the shortfall for up to 30 years. A judgment debt that stands for three decades. Whatever property — movable or immovable — the owner acquires in that time can be attached and sold to recover what's owed.
The owner loses their unit. They lose whatever equity they had built. And they walk away still carrying debt.
There is also the question of what the buyer at auction actually pays. The hammer price is not the full picture. In terms of Section 118 of the Municipal Systems Act, the buyer is liable for up to two years of outstanding municipal debt on the property. Outstanding levies must be settled to enable transfer. The true cost of acquisition is often far higher than the headline auction figure — a reality that catches many first-time auction buyers entirely off guard.
The Window That Closes
The single most important thing an owner in financial difficulty can do is act before the legal process runs its full course.
Stratafin runs a "help you sell" programme specifically for this situation. When legal proceedings have commenced against an owner, their team contacts the debtor and presents the case directly: your equity is disappearing. The longer you wait, the less there is to recover. An estate agent can sell your property now — at market value — and you walk away with something.
Most owners, by that stage, have adopted what Ruis describes as the ostrich approach: head in the sand, hoping the problem will resolve itself or that the process will stall. It doesn't. And by the time they call, often days before a scheduled auction, stopping the process no longer makes financial sense for any of the parties involved.
The advice is consistent and unambiguous: if you are struggling to pay your levies, engage early. Talk to your body corporate. Talk to your managing agent. Talk to an estate agent. Sell while there is still equity to protect.
A voluntary sale at market value, even in difficult circumstances, produces a vastly better outcome than a forced sale at auction.
What This Means If You're Buying
The levy non-payment crisis is not just a problem for people who aren't paying. It's a problem for anyone buying into a scheme where the arrears book is large and the body corporate is struggling to collect.
When you buy into a sectional title scheme, you buy into its financial obligations. If the scheme raises a special levy in month two of your ownership because of accumulated arrears that predate your purchase, you pay your proportional share. You cannot opt out because the problem existed before you arrived.
Before signing any offer to purchase in a sectional title scheme, ask for the debtors report. Ask what percentage of owners are in arrears. Ask whether legal action is being taken. Ask what the outstanding balance is and how long it has been outstanding.
A scheme with 25% non-payment and no active collections process is a scheme heading in one direction. You deserve to know that before you commit.
The Bigger Picture
South Africa's sectional title sector has grown faster than the governance culture supporting it. More schemes. More owners. More complexity. And a rising proportion of people who either can't pay, don't know they have to, or have decided they won't.
The 5% non-payment figure from a decade ago was manageable. The 25 to 30% figure today is not. It is reshaping the financial health of schemes across the country — slowly, quietly, and at significant cost to the owners who are doing the right thing.
Understanding this is not about alarm. It is about making informed decisions — as a buyer, as an owner, and as an investor — with a clear picture of what the numbers actually mean.