{"id":15789,"date":"2026-01-26T09:07:44","date_gmt":"2026-01-26T09:07:44","guid":{"rendered":"https:\/\/microvibenews.com\/?p=15789"},"modified":"2026-01-26T09:07:44","modified_gmt":"2026-01-26T09:07:44","slug":"sectional-title-schemes-what-buyers-dont-see-coming","status":"publish","type":"post","link":"https:\/\/microvibenews.com\/?p=15789","title":{"rendered":"Sectional title schemes: What buyers don\u2019t see coming"},"content":{"rendered":"<p><\/p>\n<div>\n<p><iframe loading=\"lazy\" src=\"https:\/\/iframe.iono.fm\/e\/1638709?layout=modern\" width=\"100%\" height=\"170\" frameborder=\"0\" data-mce-fragment=\"1\"><\/iframe><\/p>\n<p>You can also listen to this podcast on iono.fm here.<\/p>\n<p><strong>SIMON BROWN: <\/strong>I\u2019m chatting with Jonathan Kohler, CEO and founder of the Landsdowne Property Group. Jonathan, appreciate the time. When folks are looking at buying property for rental income \u2013 and we\u2019re talking here particularly of sectional title \u2013 the focus is typically going to be around price and yields and amenities, location \u2013 all important things.<\/p>\n<p>But in a recent note that you put out, you talk around it actually being around the levy and its payment and, if there are potentially arrears in the levy, that is a way more important indicator of the success of that property.<\/p>\n<p><strong>JONATHAN KOHLER: <\/strong>100%, Simon. We find it time and time again. I can look at developments that we manage, specifically in the sort of lower LSM or first-time homeowners that are buying into sectional title schemes. They don\u2019t really understand what sectional title is and they don\u2019t really understand why paying levies is so important. They\u2019re having a look, and they\u2019re thinking, okay, I\u2019m purchasing this property for a specific price. There\u2019s a levy that I have to pay, rates and taxes, et cetera. What they don\u2019t realise is that if they buy into a scheme that\u2019s not financially sound, where people are not paying the levies, they\u2019re never going to be able to sell that property and get any reasonable capital appreciation on their investment.<\/p>\n<p><strong>SIMON BROWN: <\/strong>That\u2019s a great point. Levies are there, it\u2019s security insurance, it\u2019s lights and water, but it\u2019s maintenance. It\u2019s the long-term management of the property. And if that starts to decay, to your point it almost sort of cascades.<\/p>\n<p><strong>JONATHAN KOHLER: <\/strong>100%. If I look at one of the schemes that we\u2019ve been managing over the last sort of, I\u2019d say, six months to a year, you\u2019ve got sort of first-time homeowners, people who haven\u2019t owned in a sectional title scheme.<\/p>\n<p>When we do the handover from the developer and that first transfer goes through and the body corporate is established, we sit with those new owners and explain to them, for example: Do you know that you bought in a sectional title estate? Do you know what sectional title is? Do you know that you only own the inside section of your unit, and the exterior is part of the common property? Do you know why you pay levies, et cetera?<\/p>\n<p>You do as much education as you can when you\u2019re handing over. But what ends up happening is, say, a hundred units are occupied, the residents get together and they say, \u2018Listen, we feel that the levies that we\u2019re paying are too high\u2019.<\/p>\n<p>The community gets together and they decide not to pay levies. And what ends up happening there? They think that they\u2019re going to save money and get those levies to sort of a lower amount, and they\u2019re going to save money. But what ends up happening is the community gets together, they perhaps fire the managing agent or they appoint an executive managing agent. The executive managing agent doesn\u2019t really have the know-how of how to manage these schemes.<\/p>\n<p>What slowly ends up happening is the security company is not paid timeously, the garden maintenance company is not paid timeously. The building insurance isn\u2019t paid timeously, which means that the managing agent or the estate manager is not actually managing the building and it starts to degrade.<\/p>\n<p>In a couple of years\u2019 time, what you have is that the complex hasn\u2019t been painted, the building insurance hasn\u2019t been paid, they haven\u2019t had an AGM that year. And when they try and resell that property, the new purchaser will say, \u2018Okay, please can you give us the latest audited financial statements of the building?\u2019 \u2013 \u00a0and there are no audited financials in place.<\/p>\n<p>Then the banks are not going to give a bond for a new purchaser to buy the property. And if they\u2019ve bought a little one-bedroom for R600 000, now they\u2019re actually going to sell it for R500\u00a0000 because there\u2019s no clean audit, there are \u00a0no financials. The maintenance hasn\u2019t been done. So it\u2019s a disaster.<\/p>\n<p><strong>SIMON BROWN: <\/strong>Absolutely. I like the point. It sort of starts slowly, and then I imagine it happens quickly. It also makes me think. There was something else you had in the note, which is, you know, \u2018we talk to the selling agent\u2019. That\u2019s if we\u2019re looking to buy something. The agent is who we\u2019re talking to. You\u2019re making a point that speaks to the managing agent as well, because they really understand what\u2019s happening and give you better insight in terms of the financial state and arrears and the like \u2013 100%.<\/p>\n<p><strong>JONATHAN KOHLER: <\/strong>You need to speak to the portfolio manager who\u2019s allocated to that building and ask them questions like: \u2018What\u2019s the levy-collection percentage?\u2019 \u2018Are people paying levies? Are you up to date from a compliance perspective as a building? When was your last AGM held? Did the auditors approve the financial statements or is there a comment on them? Is it a qualified audit? Why?<\/p>\n<p>You\u2019ll very, very quickly find out whether you should be investing in the property or not, because you get investors, sort of professional debtors \u2013 but professional investors as well \u2013 who will get a bond and buy into a scheme. And, for example, from day one they won\u2019t pay levies, but they\u2019ll put a tenant in. They\u2019ll be getting a really good rental yield, but they\u2019re not paying their bonds. They\u2019re not paying their levies. They\u2019re not paying their rates and taxes.<\/p>\n<p>And if they are \u2018professional debtors\u2019, they can sort of just make settlements in the specific shifts and the auctions, make settlements and move it along for two to three years. They\u2019ve two to three years of rental, but they haven\u2019t paid the running costs for the apartment\u2013 and they never intended to. They\u2019ve got an extremely high rental yield for two or three years, and then they\u2019ve bought it into a company that sequestrates the company.<\/p>\n<p>That happens in buildings that we manage as well. They\u2019re professional debtors to go in there. Airbnb \u2013 the unit doesn\u2019t pay levies from day one and three or four years\u2019 later, when it eventually gets to the sheriff\u2019s auction, they\u2019ve made R300 000 and they\u2019ve taken debt.<\/p>\n<p>That\u2019s also a problem.<\/p>\n<p><strong>SIMON BROWN: \u2018<\/strong>Professional debt\u2019 is not a phrase I\u2019d heard before, but one that now spooks me, and probably rightly so.<\/p>\n<p>We\u2019ll leave it there. That\u2019s Jonathan Kohler, CEO and founder of Landsdowne Property Group. I appreciate the time.<\/p>\n<p>Listen to the full MoneywebNOW podcast every weekday morning\u00a0here.<\/p>\n<\/p><\/div>\n<p><script data-cfasync=\"false\">\n            !function(f,b,e,v,n,t,s)\n            {if(f.fbq)return;n=f.fbq=function(){n.callMethod?\n                n.callMethod.apply(n,arguments):n.queue.push(arguments)};\n                if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0';\n                n.queue=[];t=b.createElement(e);t.async=!0;\n                t.src=v;s=b.getElementsByTagName(e)[0];\n                s.parentNode.insertBefore(t,s)}(window, document,'script',\n                'https:\/\/connect.facebook.net\/en_US\/fbevents.js');\n            fbq('init', '779812924991616');\n            fbq('track', 'PageView');\n        <\/script>#Sectional #title #schemes #buyers #dont #coming<\/p>\n","protected":false},"excerpt":{"rendered":"<p>You can also listen to this po&hellip; <\/p>\n","protected":false},"author":1,"featured_media":15790,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[2607,3917,1223,2314,10485,9106],"_links":{"self":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/15789"}],"collection":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15789"}],"version-history":[{"count":0,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/15789\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/media\/15790"}],"wp:attachment":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15789"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15789"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}