Many sectional title property schemes in Cape Town’s Southern Suburbs – possibly 30% of the total – are so badly managed that instead of appreciating in value year-by-year as they should do in the current high demand scenario, they are actually losing value.
John Birkett, a top performing Rawson agent, who has specialized in sectional title sales in the Cape Peninsula’s “academic belt”, says that in most cases managing agents do an excellent financial management job, but fail when it comes to management on the ground. Managing agents need vigilant trustees and owners to monitor the day to day state of the building. He often hears, he says, owners complain that “managing agents do nothing for the building”, but if owners do not make the busy managing agent aware of their problems, then ongoing maintenance will fall by the wayside.
“It is not enough to wait for the AGM to raise maintenance issues. These need to be dealt with as a matter of urgency,” says Birkett.
“All too often,” said Birkett, “the owner of the unit, particularly if he is a non-resident, does not become fully cognizant of the problems until he wishes to sign on a new tenant or sell his unit. He then discovers that he can come nowhere near his targeted price because the general appearance of the scheme has deteriorated badly and, in addition, the behavior of certain tenants may have led to the entire scheme getting a bad reputation.”
Birkett says that good flats in poorly managed schemes often compete badly price-wise with flats in newer or better managed schemes. When the schemes are next door or close to each other, this can be especially irksome.
“In badly managed schemes,” he said, “unsightly problems will be clearly visible to the first time visitor: faulty lights are not repaired, rubbish is not collected, litter is visible in corners, the communal gardens have been badly neglected, swimming pools are dirty, façades and doors need repainting, bricks in the driveway have come loose and, in some cases, the most serious of all the problems is that the security systems are quite obviously inefficient and inadequate.”
“Owners must become more interested in their buildings and perhaps agree to take a turn as a trustee. It is amazing the difference that one good trustee can make,” he said.
Some owners, says Birkett, will almost on principle stand against attempts to raise levies to the level where an ongoing maintenance buffer fund can be created. They may also resist the appointment of a competent managing agent and/or a good maintenance manager/caretaker as this would cost them more money.
“This is ‘penny wise, pound foolish’ behaviour and down the road always leads to large and unpopular special levies having to be raised.”
“The short term savings achieved by not making such appointments, inevitably result in the entire scheme losing value.”
Birkett repeated that in the better schemes the management is always truly ‘hands on’ and is usually backed by conscientious live-in trustees or managers. These people take action fast when problems become evident.
Firm action, he said, is especially necessary when the behavior of some tenants is disruptive to the scheme as a whole.
“Such bad tenants, apart from spoiling the enjoyment of their co-tenants and owners, often also have a tendency to degrade the value of owners’ units – but this too can be prevented by regular visits and inspections by letting agents, landlords and concerned trustees.”
