Arrear Levy Funding: paving the way for financial stability and peace of mind

The current economic climate has taken a toll on people’s finances and mental well-being. Rising interest rates and increased cost of living left individuals struggling to make ends meet. As a result, homeowners’ ability to pay levies has been significantly impacted, affecting the financial stability of community schemes nationwide.

Arrear levies pose significant threats to community schemes’ financial stability and sustainability. Insufficient funds hinder daily expenses, necessary maintenance, and repair projects. Moreover, they can lead to service disconnections, building decay, property value loss, and legal disputes. Such situations often force paying unit owners to subsidise non-paying owners or forego essential services, resulting in conflict and discontent within the community scheme.

Various options are available to address arrear levies, including imposing special levies, pursuing legal action, or selling the arrear levies to a third party. However, each option has its benefits and drawbacks. It is crucial to choose the one that is feasible, effective, and fair for your specific community scheme.

Arrear Levy Funding

We strive to assist managing agents and trustees/executive committees in adopting proper financial management processes that ensure financial security and legislative compliance. In partnership with BC Funding Solutions (Pty) Ltd, we bring you an alternative option in the form of our Arrear Levy Funding solution. This solution allows community schemes to operate effectively on a fully funded basis as if all owners were paying their levies. Bodies corporate can continue to take care of maintenance, repairs, and upgrades of common property. This in turn will contribute to financial stability and harmony within the community scheme.

Benefits of our solution

• Streamlined application process

Our application process is easy and simple, freeing up valuable time and resources for other essential tasks. With no hidden fees or charges other than interest, this facility provides a transparent and straightforward funding solution for community schemes in need.

• Credit approval

Credit-approved community schemes can gain ongoing access to up to 100% of their arrear levies. These funds can be utilised for various purposes, such as payment of municipal bills, contractors, service providers, or insurance premiums. The community scheme retains financial stability while arrear levies are being collected.

• Flexibility and control

We advance the loan to the community scheme, secured by a cession of the arrear levies. The scheme retains full control over the levy collection process and the legal action against defaulting owners. There is no purchase or discounting of arrear levies, preserving the scheme’s income and security.

• Affordability

Our Arrear Levy Funding has no sign-up or initiation fees. The loan only incurs monthly interest on the advanced capital. Good payment behaviour and financial management are rewarded with an interest rate reduction incentive plan based on achieved benchmarks during the loan payment.

• Fairness

By accessing our funding solution, community schemes eliminate the need for special levies or subsidies from paying unit owners. The interest is added to the arrear levy debtor accounts, preventing prejudice to paying unit owners from the costs of arrear levy funding or its repayment.

Service disconnections, building decay, legal disputes, and reputational damage resulting from arrear levies are avoided. You can maintain and improve the condition of your property, attracting new buyers and increasing the resale value of your units for the benefit of all unit owners.

• Financial stability

The loan amount is determined by the total value of arrear levies, ensuring financial stability during the collection process. This contributes to the effective cash flow management of the scheme.

Our solution offers the opportunity for the trustees to better manage non-paying unit owners, without jeopardising the scheme’s financial position. In certain circumstances, they can be assisted to retain their properties with payment plans versus legal action.

The financial stability and harmony of community schemes heavily rely on the effective management of the scheme’s arrear levies. When tackling levy debt, selecting a trustworthy credit provider registered with the National Credit Act is crucial. Remember, the road to financial stability is not one size fits all, but with the right partner, your community scheme can achieve peace of mind. Each community scheme is unique, and a funding partner should offer tailor-made solutions based on the scheme’s requirements.

Our Arrear Levy Funding offers a practical and empathetic alternative that still helps the community scheme to thrive. We have a wealth of expertise and years of experience in providing customised funding options for community schemes. Our Solutions Specialists will guide you through the application process, offering ongoing support and advice.