Story of inner-city transformation a model for hijacked apartments
If hard-pressed tenants fall into arrears it can bring buildings to their knees, but Trafalgar has a levy solution to help manage and maintain buildings
SUCCESS FOLLOWED A DECADE OF LEGAL WRANGLING TO CLEAR A DURBAN BUILDING THAT HAD TURNED INTO A NO-GO ZONE
Blessing Mbhele, a buff bodyguard turned building manager, has an angelic smile that changes in an instant when he means business. He is one of a team responsible for an innercity transformation in downtown Durban that turned a blight on the landscape to a poster boy for rehabilitation.
Ana Capri is a block of 56 apartments, some with harbour views, overlooking Albert Park. In 2004 Trafalgar Properties founder Neville Schaefer teamed up with now-deceased property guru and inner-city enthusiast Ian Fife.
Schaefer and Fife became involved in Ana Capri out of their interest in inner-city property. But soon afterwards, the building’s body corporate was deep in the red because of levy arrears. First-time owners unused to paying levies missed payments and debt piled high.
Trafalgar, SA’s largest residential property management company, which cares for 100,000 flats in 1,500 buildings countrywide, offered the body corporate a levy solutions product a loan to help run the building and conduct essential maintenance.
Dysfunctional bodies corporate contribute greatly to inner-city decay and one route
to rehabilitation requires placing them under administration and working with owners to restore normality. The administrators offer financial management training and agreements with municipalities and banks to recover arrears.
Ana Capri had degenerated
into a squalid pit and the building was hijacked by a couple who filled it with illegal tenants and collected rent.
Initially the owners were mute while their bond and levy debt mounted. Then they started a decade of legal wrangling to clear the building.
After Fife died in 2010, the task of restoring Ana Capri to financial health fell to Schaefer’s son Michael and rehabilitation expert Andre Grundler.
At the height of the crisis, Ana Capri’s body corporate owed R9m to Trafalgar, half of which was fees to lawyers tasked with recovering levy arrears. The balance was for electricity and water arrears.
Schaefer says the legal system worked too slowly. “You get a judgment against an owner in arrears. You expect lawyers to serve the judgments swiftly and for the process to be executed quickly, but it doesn’t work like that. Lawyers bill by the hour,” he says.
The city turned off the water and electricity supply to the building. “There was raw sewage in the corridors. The lift shaft was filled with garbage up to the eighth floor. It was revolting,” Schaefer says.
The sheriff of the court wouldn’t serve eviction notices because he feared for his safety. Trafalgar offered to pay the illegal occupants R10,000 per flat to vacate. Some accepted the offer, but this stopped after a Congolese woman was shot and killed by someone connected to Ana Capri.
In November 2017 the Durban high court ruled that Trafalgar had legal right to control the building. The company had spent R1m on legal fees and had R9m debt.
Trafalgar bought 15 flats owned by an investor, and when the body corporate auctioned the remaining flats, Trafalgar took them in lieu of body corporate debt.
The company spent R12m more renovating the building but only started work after contracting a security company.
Mbhele and his team protected the workmen around the clock for six months while, under the supervision of retired engineer Charles van Herzeele, they gutted the building and fitted a new roof and lift.
The job took eight months to complete and now the building is 60% let to tenants paying R3,950- R4,250 a month for flats of 42m²-45m².
The street-level flats were converted to a shop, laundromat and hairdressing salon. The building now has biometric access and CCTV cameras.
Mbhele was hired as the building manager. He says most of the tenants are teachers and police officers, and he seldom has to get heavy with them.
“We talk nicely when they arrive, nicely but straight. You have to behave with discipline in this building,” he says.
Trafalgar has commissioned three attorneys to deal with levy arrears. There are no delays and no mounting debt.
Of the 100,000 units Trafalgar manages countrywide, 3,000 use the company’s levy solutions product; 20% of them are about R15m in arrears.
Schaefer says bodies corporate should be demanding zero debt. “You have to buy into a scheme you can afford. There is no room for nonpayers. If people don’t pay compliant owners subsidise them.”
Hoosen Moolla, head of Durban’s inner-city regeneration programme, says the municipality supported Trafalgar in court. “It is a success story that we hope can help turn around other buildings in a similar situation.”
Sectional title expert Andre Grundler, who has worked with about 100 dysfunctional bodies corporate in Durban in a decade, says buildings charging levies are inappropriate for housing the poor.
Grundler has tackled highprofile cases in which rentcontrolled social housing was sold to low-income earners in subsidised schemes the results have been disastrous.
Property data company Lightstone says there are 66,000 sectional title schemes in SA, with 753,000 units worth R767bn. Lightstone’s Cindy Beets says it is difficult to estimate how many of these buildings are in distress.
Lightstone says 6,634 sale in execution notices have been issued in SA in the past four years, but only 3,862 of those distressed properties went on auction so banks could recover some of the debt.