A. PROPERTY MANAGEMENT PHILOSOPHY, RATIONALE AND OBJECTIVES

> Why are professional property management services needed and what is their objective?

  • Investment returns on rental properties.
  • Driving and sustaining property operations.
  • Maintenance, to ensure structural functionality and integrity of structures,   equipment, components and fittings.
  • Capital appreciation.

> What is property management?

  • Applying professional, personnel, administrative, equipment, information and systems to   achieve the above objectives.

> Different types of properties requiring property management.

  • Residential rental properties.
  • Commercial and Industrial rental properties.
  • Sectional (common areas).
  • Facilities management.

B.  PROPERTY MANAGEMENT KEY AREAS

Objective is to ensure that clients get optimal returns from their properties as investments, by;

  1. For rental properties, the properties are let at the best market rentals and lease terms that are to the optimal financial advantage to the client. 
  2. Proper leases and other contractual documentation are in place to protect the contractual and pecuniary interests of the clients. 
  3. The management of services, utilities, maintenance and other operations are carried out properly to the best and cost effective standards
  4. The property structures, components, plant and equipment are maintained properly, regularly and cost effectively, to also ensure that their long term values are not just maintained but enhanced.
  5. Rental, car parking and service charge income are collected fully and properly, and accounted for and remitted accurately and in a timely manner. Good financial practices and procedures are maintained
  6. Proper accounts and records are maintained and provided to the client.
  7. Statements and reports to the client are generated and sent properly and regularly.
  8. Statutory obligations such as ground rent, rates, VAT and fire certificates with regard to the property are adhered to.
  9. Good business and professional relationships are maintained on behalf of the landlord, with tenants and other parties.
  10. The client is kept properly briefed and professionally advised, and suitable advices and recommendations to enhance the clients’ interest are raised.

C. LETTING AND LEASE ADMINISTRATION

This covers the entire role of letting any available space or units in properties and negotiating rent reviews and lease renewals on existing tenancies, as well as administration of the leases to ensure adherence to the terms thereof.

1)Lettable areas (commercial) 

  • Carry out the physical measurements of the lettable areas in the development including the working out of common area apportionments where applicable.
  • Accuracy in the measurement of lettable areas is important as commercial rental computations are based on the lettable areas.

2)Rental and service charge rates and leasing terms and conditions

  • Advise on appropriate rental levels and the main letting terms and conditions. A key consideration will be the need to maximize the landlord’s returns from the investment and facilitate optimal tenancies in an increasingly and continuously demanding and complex market.
  • While the intention is to maximize returns from the investment, it is important to set terms that are competitive and attractive in the market.
  • Setting of rentals is determined among other factors by the prevailing market rates for similar properties and locations as well as internal property and tenant specific parameters such as the size and nature of the tenancy.

3)Heads of Terms

  • Based on the best standard market practices and the prevailing rental conditions adopted as in 2 above, apply appropriate standard Heads of Terms which are key initial contractual tools used in letting, rental or lease renewal negotiations.
  • These Heads of Terms carry all the main rental and leasing conditions, which will subsequently be incorporated into the full lease and tenancy documents.

4)Standard lease document

  • For commercial properties, liaise with the landlord’s advocates on the drafting of the standard lease document to ensure that the main letting terms and conditions are incorporated in a practical manner. Being the main legal document governing the tenancies, a good standard lease is essential in ensuring that the landlord is placed in the best contractual and pecuniary position and that the property is well protected and maintained during the course of occupation and utilization by various tenants.
  • For commercial tenancies, it is particularly important to ensure there is proper lease documentation to avoid situations of having controlled tenants under the Landlord and Tenant Act Cap 301, as such controlled tenants are always to the landlord’s disadvantage.

5)  Marketing

  • Where premises are vacant and require to be let, execute a marketing strategy and programme and initiatives including:
  1. a) Identifying target market groups and potential tenants.
  2. b) Preparing, budgeting for and executing the advertising.
  3. c) Viewing of premises by prospective tenants.
  4. d) Vetting of prospective tenants.

6)  Signing of documents

  • Once qualifying applicants are selected, issue Heads of Terms for signing and payment of the requisite initial deposits. Then;
  1. a) For commercial properties liaise with the advocates on the preparation and execution of the   lease documents by the parties.
  2. b) For residential properties prepare the Tenancy Agreements for signing.

7)  Handing over

  • Ensure proper and recorded handover of premises to the tenants, with signed handover notes.

8)  Lease Renewals, Re-lettings and Rent Review

  • For existing tenancies where lease renewals and rent reviews are due negotiate and effect and lease renewals and rent reviews promptly as duly provided under the respective lease agreements.

9)  Lease Administration.

  • Ensure that the terms of the leases and tenancy agreements are adhered to, with regard to payments, use of the premises, maintenance and repair obligations.
  • Proper storage and recording of the lease documentation is also maintained.

D.PROPERTY MANAGEMENT AND OPERATIONS

1)Rent and Service Charge collection

  • This is a key task involving the invoicing and collection of the due rents, service charges and any other applicable incomes such as carparking fees, and recoveries such as service charge recoveries, accounting for them and making remittances to the landlord.

2)  Services and Service Charge (Commercial and Sectional properties)

A service charge to cover the operational expenses for the property is worked out, applied and recovered.

The service charge components normally include;

  1. Electricity (for common areas only where tenants are metered directly)
  2. Water (for common areas only where tenants are metered directly)
  3. Security
  4. Cleaning of common areas
  5. Maintenance of lifts, generators, water pumps and other machinery (where applicable)
  6. Maintenance of common areas and grounds
  7. Insurance (building, public liability and consequential loss of rent)
  8. Staff salaries and wages
  9. Telephone (management office)
  10. Management fees
  11. Ground rent
  12. Rates
  13. Other disbursements
  • Structure and levy service charge such that all the operating expenses for the property are recovered fully from the tenants/unit owners.
  • Continuously monitor and review to ensure financial adequacy for proper property services and operations, through budgets and audits.
  • This service charge recovery structure is normally incorporated in the lease at the drafting or renewal stage.

3)  Administer and supervise all the services, operations, utilities and maintenance and the payments   thereon diligently, expeditiously and efficiently.

  • Engagement of providers
  • Service contracts and SOPs
  • Supervision modalities

4)  Service contracts 

Negotiate for the best and most cost effective service contracts in respect of the relevant management components including:

  • Services
  • Plant and equipment maintenance, lifts, generators, pumps, CCTV

5)  Monthly and other periodic Accounts and Reports

  • Monthly statements, Receipts and Expenditure, Tenant Balances.
  • Quarterly summaries and Reports.
  • Yearly Accounts to enable audits.

6)  VAT on rent (Commercial Properties)

  • Bill and collect VAT where applicable (commercial properties).
  • ETR Administration.

7)  Annual Budgets.

Annual income and expenditure budgets are prepared for the properties, and discussed and agreed with the client, and they are monitored and followed.

8)  Service Charge Audits (Commercial and Sectional)

Service charge expense records are properly maintained and at the end of the chosen financial year for the service charge, facilitate the auditing of the service charge account with the landlord’ chosen auditor.

9)  Insurance

  • Assess and advice on appropriate and adequate risk covers for various risk categories including:

–  Fire

–  Theft (Applicable building components)

–  Earthquake

–  Public liability

–  Loss of rent

–  All risks

–  Terrorism and Political Risk (based on Risk Assessment by type and location of property.

Insurance valuations advice the adequacy, every 3 years guideline.

10)  Statutory Payments – Ground Rent and Local Authority Rates

Payment of the applicable government ground rent and local authority rates promptly.

11) Repairs and Maintenance

Prepare maintenance programmes for the property that include programmed and periodic inspections of the various areas and components to ensure that maintenance and repair issues are addressed diligently, promptly and cost effectively.

12) Tenants communications

On the landlord’s behalf and as one of the management functions, handle all matters of communication to and from the tenants (revenue source), and ensure good tenant and overall landlord, tenant and property manager relationships.

13)  Personnel and Administration

  • Property Managers.
  • Site Property Managers.
  • Property Accountants.
  • Caretakers.
  • Other site staff where applicable.
  • Equipment.

E. SPECIFIC EXPERIENCES AND OBSERVATIONS

1)  Apart from the technical and professional proficiency, a good understanding of areas related to property management including;

  1. a) Good understanding of relevant statutes and regulations on land matters, building regulations, taxes, labour and basics of company law.
  2. b) Market factors and dynamics, rentals, prices and trends.
  3. c) Understanding property structures and equipment such as pumps, boreholes, generators and lifts.

2)  Good marketing skills, related to letting.

3)  Understanding IT aspects applicable to property management.

4)  For sectional properties ensure good recovery mechanisms (sublease terms) which should   be incorporated into the unit title sublease/sectional documents and regulations.

5)  Also, for sectional properties, basic company administration, managing companies.

  • Shareholders
  • Company Returns
  • AGMs

6)  Attention to detail in handling matters and communications.

7)  Quick action and response on matters.

8)  Ultimately, delivering and demonstrating value and professionalism in the property   management handling and client advices towards their objectives.