Plan for service charge for effective running of houses

The number of people living in apartments in Nairobi and other urban areas of this country has grown significantly over the last 10 years.

They may be owner-occupiers, tenant purchasers or ordinary tenants. Whether tenants or owners one thing that brings them together is the shared facilities and services.

The playground, the swimming pool, lifts maintenance, security, common areas lighting, cleaning, fire fighting, garbage collection, landscaping and ground maintenance.

For these facilities to be maintained and services provided, they are required to pay a service charge which normally covers the budgeted costs for them and costs of management.

Service charges can vary from year-to-year depending on the economic factors at play at that time. Details of what the items covered and amounts to be paid are normally set out in the tenancy agreements or resolutions of the management company in case of sectional properties.

All service charge costs are met by the tenants or owner occupiers and managed by a management committee formed by the owners, or the landlord or a managing agent.

Second to good design and workmanship at the construction stage, quality and value of any block of apartments will be determined by how effective service charge is collected and managed. If any of the parties involved fails to meet their obligations the implications can be adverse.

If the tenants or owner occupiers fail to pay service charge in a regular and timely manner, remittances to service providers will delay with the likely consequences of penalties or withdrawal of services.

Just imagine if garbage was not collected and cleaning not done for a week or two how unhealthy a residential place would be. What if the services of security guards were withdrawn?

Wouldn’t thugs and other people seeking mischief not terrorise the tenants and their visitors? Who would open the gate and direct visitors?

Similarly if payments were made and the landlord or the managers failed to procure and supervise the service providers effectively, service levels and general environment would deteriorate.

Apart from affecting the quality of the property, failure to meet obligations by any of the parties may lead to unlikely tension and disputes.

If just one of the multiple occupants or the landlord decides to be litigious they can drag all the other occupants and property owners into incurring unnecessary costs and also strain relations with neighbours.

It is, therefore, important for property purchasers or tenants to find out, for personal budgetary purposes what the current and future service charges are likely to be.

One should also check if there is a reserve fund and what plans there are for major works that could affect service charge in the next year after purchase or rental.

In addition one should check the management structures put in place by the landlord or company. When signing the instruments of purchase or lease, it is vital to check the dispute resolution mechanisms provided for with regard to service charge collection and management.

The writer is a land economics and management expert. Email: [email protected]