In October last year, two new Acts relating to the management of Sectional Title developments were promulgated – the Community Services Ombuds Service Act, and the Sectional Title Schemes Management Act (STSMA). The STSMA is primarily concerned with the operational requirements that form part of the management of Body Corporate schemes, and one of the most important parts of this act is Prescribed Management Rule (PMR) 22.

PMR22 states that a body corporate must prepare a detailed, written maintenance, repair and replacement (MM&R) plan for the common property, in which the following must be set out:

  • A list of the major capital items expected to need maintenance, repair or replacement within the next 10 years.
  • The current condition of these items.
  • The anticipated timeline for when the repairs or replacement will need to take place.
  • The estimated cost of these repairs or replacements.
  • The anticipated life expectancy of the items once they have been maintained, repaired or replaced.

PMR22 also stipulated that a reserve fund must be established to provide for the implementation of the MM&R plan and that the annual contribution to this reserve fund be calculated according to the following formula: (Estimated cost minus past contribution) divided by expected life.

As a general rule of thumb, the suggested amount for this reserve fund is 25% of the total annual levy paid in by all members of the Sectional Title development. So if the total amount is R200 000 annually, then the additional amount required for the reserve fund is R50 000.

Advantages of PMR22

While there has been some resistance to the regulations imposed by the new Sectional Title acts, and PMR22 in particular, the Rule does, in fact, have several advantages, namely:

  • Maintenance can be carried out systematically, rather than in an ad hoc way.
  • Contracting service providers used can be monitored to gauge their efficiency and cost-effectiveness.
  • Subjective decision making by different individuals in order to implement emergency corrective maintenance is kept to a minimum.
  • The overall standard and look of the property will be enhanced, which in turn has a positive effect on property valuations.
  • Regular maintenance helps keep costs lower as smaller issues can be identified and addressed before they become expensive major repairs.
  • Long-term or even irreparable damage to the building structure, which can occur through neglect, can be avoided.
  • Possible fire and safety hazards, which can also occur through lack of regular and preventative maintenance, can be prevented.

At the Property Partnership, we have extensive experience in valuing residential properties, including Sectional Title Units. We can help you understand the new regulations and work with you to determine realistic levies and reserve fund contributions in accordance with the new Acts. Chat to us today – we’re standing by to help.