It focuses on the long term turnaround of bodies corporate in distress situated in inner cities.
“One of the intractable parts of inner city renewal remains the turning around of bodies corporate in distress, says Andrew Schaefer, managing director of Trafalgar Property Group.
There are visible efforts of inner city renewal in cities including Johannesburg, Durban, Port Elizabeth, Cape Town and Pretoria with improved pavements, street lighting, security, public recreational spaces being addressed, he explained.
“Our inner cities still exhibit many buildings with severe maintenance, service delivery and safety problems and these tend to be bodies corporate with very few turnaround plans on the table.”
Trafalgar is initiating an improvement and training project, with end goals including an owner and resident body that is educated in managing their building. This will create favourable circumstances for potential buyers and sellers.
Typical issues in buildings include:
- Being in extensive arrears with the council which often leads to curtailed services.
- Huge maintenance backlogs which result in unsafe and unhygienic conditions to live in.
- Flats which have been abandoned by owners and occupied by tenants who may or may not be paying.
These factors and the lack of financials lead to the value of these buildings plummeting, making it difficult for owners to sell.
Trafalgar will work with an administrator, appointed by the high court to take control of the decision making in the building. Working with owners and residents, addressing maintenance and financial issues and providing training about sectional title matters are all important elements of the project.
“The projected turnaround time for any particular building will probably be between three and five years and we hope to offer sufficient upfront short term changes to help induce a positive attitude.”
Schaefer believes that it is important to demonstrate that involvement isn’t all about raising costs and becoming stricter with credit control. It’s also about service delivery within the building and initially trying to deal with fairly simple cosmetic maintenance that can make a quick and visible difference.
Things such as replacing light bulbs, tap washers, waterproofing, touches of paint, fire fighting equipment which works can have a big impact without being too expensive and can really set things going forward onto a positive footing, Schaefer adds.
Trafalgar sees the process as fairly structured:
- Approach council to get the most recent municipal accounts and make arrangements in terms of payments, managing down penalties and interest
- Introduce the basics of financial management by doing a budget for the building, developing a levy-income budget and putting billing and debt collection in place.
- Do a full maintenance inspection and try to build some elements of that maintenance plan into the budget and remain conscious of affordability.
- Build a relationship with the existing resident’s committee, focusing on sectional title training and information
The greatest priority for Trafalgar is to engage with the owners and residents, providing communication, training and information about the whole turnaround.
The eventual objective is that the turnaround will provide an opportunity for some owners to exit, new owners to buy in and for the whole structure to improve.
While the initial pilot project will be run in a few selected buildings in Johannesburg, Trafalgar would like this to lead to the establishment of training groups throughout inner city areas and achieve a situation where individuals feel sufficiently competent to transfer these skills to new buildings.
“Although historically we have tried to avoid these buildings because of the magnitude and nature of the problems, we are very excited about this project and look forward to growing the outcomes," Schaefer adds.
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