Sectional title body corporates and homeowners’ associations are often in the middle of a snarl of maintenance issues.
These throw up a host of nasty challenges that try the most even-tempered trustees, residents, and residential property owners.
This is often a space that is a vortex of problems that includes sloppy service and general ignorance of laws relating to property management in South Africa.
Some smart solutions have emerged in response to this nestle of problems, including a collaboration by a few specialists in an under-serviced niche in the South African property industry.
Instead of competing and working separately for their clients, boutique firms Addsure and ZDFin, in conjunction with key professionals like attorneys, engineers and solar specialists have made a significant impact on the well-being of some property schemes.
Addsure’s Mike Addison says the partnership between insurance experts, engineers, and specialist property financiers like ZDFin has been a game changer.
“This expertise should go hand in hand and yet the people involved in providing these solutions are mostly competing and working in silos. Our approach with ZDFin and other experts has been able to dramatically improve the wellbeing of some schemes.”
Addison says insurance brokers identify problems in buildings or are advised of these by underwriters, which is a typical, one-dimensional response.
But by bringing in a multi-disciplinary team of experts, problems are more meaningfully resolved.
“We have been able to give clients long lasting solutions pretty quickly, rather than simply point out problems.”
Addison gives an example of how this plays out:
“Normally a broker would be dispensing advice to a scheme, say their boundary walls are not built to specification. This unfortunately means insurance cover will be restricted until the fault is remedied“.
“The sectional title scheme may have a tight budget and insufficient funds in reserve to fix this. The same building may also have an ageing hot water system that results in geysers failing regularly with damaging leaks”.
“The system may also be generally inefficient and that results in high electricity bills. Consequently, the insurance policy is under strain. All this, together with the problematic walls, means the insurers soon consider that a sectional scheme is an undesirable risk.”
Addison says with no easy solution in sight and a harassed managing agent, frustrated trustees do not know what to do and roll the problem over from one meeting to the next.
“The trustees look to each other and ask the managing agent to investigate and find a solution and the solutions take time to find.”
Addison and ZDFin work with a team of experts. They have established relationships with specialist attorneys, engineers and maintenance professionals who are trusted and reliable.
“By bringing in the requisite skill (engineer, master plumber or builder, quantity surveyor et al), we can propose a remedy coupled with a financing option to enable immediate remedial action: everything from making the wall insurable to replacing the geysers to getting solar installed. This is our business and not the business of a managing agent.”
Addison says a sectional title scheme he and the ZDFin team worked with recently was able to borrow R3 million without any impact on levies. It was financed out of the monthly maintenance fund and the repairs were done immediately, which translated into electricity savings.
“Doing the work now rather than later also means that insurance is remedied straight away. This removes risks and means no special levy, no inflation, and no further deterioration. The main thing is that trustees and managing agents often do not have time or the right contacts to find solutions”.
“By understanding our client’s story or needs, instead of just delivering bad news, we are able to deliver solutions and change the story of the scheme completely and quickly”.
“Everybody wants a well-managed residential building. They just do not know where to turn to achieve this”.
In 2016 the Sectional Titles Schemes Management Act was made law in South Africa. The legislation is well intentioned in its aim to govern residential building maintenance.
But the Act has complicated the lives of trustees and managing agents. Regulations make it mandatory for each body corporate to have a ten-year maintenance plan approved by owners and detailing projected works.
The plan provides direction for the computation of levies. These plans are often not practically affordable, though are critically important and most trustees have little or no experience of how to finance them and the works that they direct.
The collaboration between experts like ZDFin and Addsure has provided a much-needed solution in this space … but there is still much to be done.
ZDFin is a specialist finance company providing smart solutions for Sectional Title Bodies Corporate, Home Owners’ Associations and Share Block companies. We service all residential Community Schemes affected by the Community Ombud Service Act, including non-profit companies and voluntary associations governed by a constitution. ZDFin has a wealth of practical experience in property and financial management. We understand these challenges and our range of targeted financial products can be tailored to meet the specific needs of each individual scheme.
CEO, Michael Schaefer was previously a director and shareholder at Trafalgar, the country’s biggest residential property administration company, started by his father over 50 years ago. His move to establish ZDFin was in part motivated by the 2016 Sectional Titles Schemes Management Act.