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Property owners unhappy at the new Community Schemes Ombud Service levy

Posted On Friday, 09 October 2015 20:06 Published by
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Large property owners have not warmed up to the newly created ombud office that is due to provide inexpensive dispute resolution services for tenants and landlords, mainly of apartment blocks.


The Community Schemes Ombud Service, whose regulations are up for public comment this month, is aimed at providing an alternative grievance resolution service for issues that arise in residential complexes, such as disputes over incorrect or unreasonable levies; behavioural issues, including noise; and parking.

According to its website, the ombud dates back to 2004 when Cabinet considered the issue of dispute resolution in sectional titles “and decided that the government must intervene to address the situation in the interests of all housing consumers”.

The office will be collecting a monthly levy of as much as R68 per household from an estimated 130,000 residential complexes and retirement villages in SA, each with an average of 100 units. This means it could rake in billions of rand within a few months.

The levy will start from R3.40 for properties valued at R500,000. Units valued at R800,000 will pay R13.60. The maximum amount payable is R68 for units valued at R2.5m and upwards.

While it is meant to save disputing parties from the expenses of taking the legal route, the proposed levy has found no enthusiasm among property owners, who say the additional “tax” will hit the sector hard.

The South African Property Owners Association (SAPOA) said it was a concern that the levy “will effectively amount to another tax”. SAPOA CEO Neil Gopal said the “tax” would result in either an increased purchase price for property “or levies will be increased accordingly by board corporates”.

“Owners that might not use the service provided will still end up paying for such a service,” he said. “It will also have an effect on the already challenging property market, whereby owners are expected to lower their selling price to accommodate limited funds provided by banking institutions.”

But the ombud CEO Themba Mthethwa, defended the levy, saying the office would provide “affordable justice”. The ombud had to be selffunding by collecting the levy on a cost-recovery basis, he said.

“The levy is thus calculated to cover the long-term cost of establishing and operating the ombud on a national scale,” he said.

The proposed levy has found no enthusiasm among property owners, who say the additional ‘tax’ will hit the sector hard.

Source: Business Day

Last modified on Saturday, 10 October 2015 07:48
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