“There was little inspiration to be had from last week’s State of the Nation Address (SONA 2022), especially insofar as it relates to the residential property sector,” says Michael Schaefer CEO of specialist finance company ZDFin. “Perhaps the one positive take-out is the growing acknowledgement of the central role of the private sector to address the country’s most critical concern of job creation.”
The bleak economic outlook, the collapse of SOE’s such as ESKOM and the failure of formal bodies that should be supporting the private property/ home-owner, has added additional layers of burden and cost. Unprecedented levels of incompetence and bureaucracy have rendered the judiciary largely ineffective in supporting and protecting home-owners, this from the backlog within the system, for everything from processing legal matters such as tenant delinquency, to registration of properties at the Deeds Office.
The resulting low return margins on rentals, exacerbated by the poor economy and compounded by Covid and the ever-escalating cost of utilities, have put enormous pressure on capital growth. According to Schaefer, holding on to good tenants who pay their rent and take good care of your property, ‘is an investment on its own’ and one landlords would be well advised to make.
“As with private owners feeling the financial squeeze, schemes too are affected by the knock-on effect of the same factors and are equally dependent on the system for support to collect arrear levies. While the Community Schemes Ombud Service (CSOS) has been setup as a specialist body ‘to regulate, monitor and quality assure scheme governance documentation and develop and provide a dispute resolution service’ – amongst other things – it is ultimately dependent on the judiciary and remains specialist in name alone.”
“With strong management at the helm of bodies corporate and other community schemes, either by the Trustees or an external professional such as an Executive Managing Agent (EMA), we see opportunities to continue making those substantial property investments worthwhile…with a proviso however,” cautions Schaefer. “Go in with your ‘eyes wide open’ – don’t expect massive growth and rental returns, and don’t expect ‘the System’ to support you.”
“We know how tough things are,” he says. “We see it day in and day out within our business. Management of schemes and communities is often a thankless task for the thousands of volunteers who take on the task and the responsibilities; increasingly owners are not prepared to stand as trustees and the burden falls onto a few, many of whom lack the skills and are thus ill-equipped to run the ‘business’ of the body corporate / scheme. To add, Managing Agents are not paid commensurately to take on a lot of the more difficult work of property management, often without the full support of management or owners, in order to really make it work for all involved.”
“Our EMA service offering is gaining traction,” Schaefer adds, “because it ticks all the boxes for professionalism, responsibility, delivery and accountability. ZDFin literally ‘steps into the shoes’ of the conventional trustees by way of a special resolution of the members, and is responsible for the day-to-day decisions that the trustees would normally make. They perform their functions as the ‘trustees’ of a scheme without the indemnification that the Sectional Titles Schemes Management Act (STSMA) affords conventional trustees and have the know-how and practical experience to assist schemes with what would sometimes be difficult for volunteer trustees to do.”
The EMA is legally obligated to report to all owners/members quarterly, by way of an EMA Report, that reports on the administration of the scheme. “Where we have been appointed as the EMA, ZDFin has adopted the approach of more regular reporting,” Schaefer explains.
“Experience has shown us that more frequent and consistent monitoring ensures transparency and lessens the number of queries from members every quarter, on the management of their scheme. An experienced EMA is arguably a ‘no-brainer’ for many schemes and ideal for schemes who are struggling to get volunteer trustees.”
For more information about our Services contact www.zdfin.co.za
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Joanne Hayes, Tumbleweed Communications
Tel: +27 (0)83 6277249 e-mail: email@example.com
ABOUT ZDFIN – https://zdfin.co.za
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.