Transparent service charge management vital in controlled development

The ubiquitous use of ‘controlled development’ in the housing sector sales pitch over the years may have reduced an important quality differentiator to a cliché.

There is, however, no gainsaying the importance of genuine controlled development. Where visionary, well-resourced developers commit to implementing this attribute, the value and quality of the resultant property are profound.

It could be the difference between, say, a magnificent stand-alone home abandoned to the vagaries of barely-there supporting amenities and a structured community with by-laws and an enforcing mechanism for common aesthetic and construction standards. It may be what ticks the right boxes of well-planned and functional services such as water, sewerage, roads, recreation and open spaces.

The essence of controlled development is to optimize land usage as a scarce resource. It enables prudent planning that takes into account finer details such as available landmass, topography, weather and other natural elements. It is the reality check of desire against pragmatism insofar as the number of units, sizes and designs that a given piece of land can accommodate. It also factors in essential amenities and needs.

Buying or building a house is a serious financial undertaking. For many people, it is probably the single, most expensive material possession of their lifetime. Whether financed from savings, sale of another asset(s) or mortgage, the huge cost of investing in a house demands the best value for money.

For investors in own-and-live houses, the best for least cost is an existential matter. Whether in a plum address or a modest location, the gamut of considerations to ponder before you make that final call goes beyond the brick and mortar edifice and visual aesthetics. You must also reflect on habitability: provisions that are purposed to make life orderly, convenient and enjoyable.

Services such as security, waste and pollution management, transport and communication infrastructure are critical to a residence. Because their installation and maintenance are not cheap, it makes economic and practical sense to go for economies of scale. Where individual homeowners coalesce into a community, or a master developer provides a managed community, costs are shared making them affordable. It also enables centralisation and professionalisation of the management of the services.

The ability to pool tenants together is major selling point for gated communities. By leveraging on numbers and levying a modest cost, developers provide and maintain facilities such as access roads and streetlights that would be beyond individual investors’ means. Often, they engage professional firms for services such as security and attendant benefits like rapid response and alarm services. These would be in the realm of unaffordable luxuries as separate costs for individual homeowners.

Controlled development instils and guarantees standardisation. Left to their own devices, for instance, it is likely one owner will marram the section leading to his home, his neighbour will invest in cabro blocks, the next one will tarmac his portion and another will do nothing. The result would be a riot of shades, designs and workmanship that is unfavourable to the look-and-feel of the neighbourhood and the resale value.

The absence of standardisation could also be a literal eyesore. The possibility is real in sensitive areas such as sanitation and waste disposal. Unsightly sights beckon in situations where tenants and homeowners in the same estate privately and separately contract different garbage firms.

Depending on the size of the gated community, schools, shops, eateries, clubhouses and other facilities are also catered for. These can be entrusted to residents’ associations or private management entities as is the case in Karengata, Muthaiga or Runda.

Growing awareness around health and environmental hygiene also underscores the need for controlled development. Open spaces, recreation zones, walks and trails are best guaranteeing by a centralised plan and dedicated management. The same applies to sports amenities such as gyms, swimming pools and courts. Finer details of location, size and shape are also a collective input.

And so is landscaping. The lush lawns, the nicely trimmed hedges, the well lined up and aligned trees and the staggered benches overlooking the gentle slope that nestles at the feet of the live fence is not incidental. It is likely the product of meticulous planning matched by the execution wherewithal.

The elephant in the room in controlled development is the service charge levied by investors and estate managers. To maintain value and aesthetic appeal, facilities demand maintenance through regular servicing. Buyers are often required to pay a significant one-off amount towards the installation budget. They are then expected to pay periodic payments (monthly, quarterly, semi-annual, etc). These obligations are usually contained in a sale or lease agreement.

It is human nature to desire shortcuts and to push boundaries and pennies as far as possible. Not uncommonly, controlled development agents have to contend with reluctant service charge payers. Claims of over-priced rates are frequent. Complainants love to claim they can obtain similar services cheaply by themselves. In some cases, management agents and reluctant residents end up in court. The sense of rip-off can be fuelled by a lack of transparency around relevant expenditures.

The latter problem can be mitigated by transparent developers. Tatu City, for instance, avails its audited service charge accounts to residents. The mixed-use developer has borrowed from global practices in large real estate developments around the world to make information on pricing rationale available on request.

By tapping into economies of scale through security and maintenance, Tatu levies user charges at less than half those in Runda and Muthaiga. The firm also ensures those experiencing financial constraints especially in the era of corona have a reasonable window to make the payments through flexible quarterly payments.

 

The author is the Managing Director, Maven Design & Build Ltd, a Kenyan-based construction consultancy

jeremygitongaj@gmail.com  

  

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