National residential manager Trafalgar has announced an ambitious plan to stabilise South Africa’s inner city sectional title buildings after ending a two-year pilot study.

Dysfunctional sectional title bodies corporate have been identified as a major cause of central city decay.

Trafalgar CEO Neville Schaefer says the plan empowers sectional title owners to build their wealth through the growing value of their homes.

"The irony of the inner cities is that some of the most prime real estate in the country has been falling in value in the midst of a major property boom," says Schaefer. "Committed owners who understand what they must do and what the rewards are for doing it can turn that around. It’s a long slow process, but belief in the possibility of growing wealth and a pleasant home environment are strong motivators for owners to take the necessary pain."

Schaefer says the sectional title rehabilitation plan uses a high court appointed judicial administrator who puts the owners, rather than the creditors of the building, at the centre. He works closely with the owners devising ways they can overcome the property’s problems. They agree on what action to take and the administrator uses his court powers to help the owners take that action.

The plan was devised together with property journalist and former developer, Ian Fife, who was appointed administrator for the pilot study on Sorrento in Arcadia, Pretoria, and Anna Capri in Albert Park, Durban. He has been training permanent judicial administrators.

Schaefer says he and Fife became concerned four years ago that municipalities and banks were trying to solve the problems of growing debt and defaults with action that destroyed rather than built value. They took judgements against owners and withdrew their services or funding. So prices collapsed. "We felt there must be a way to build value," says Schaefer.

"Our main motivation was as property investors in the inner city. We also formed a specialist inner city property management arm at Trafalgar. So the more thriving sectional title properties there are, the more business there is for us."

He says owners in the inner city have been through difficult times over the last 15 years. "They have been badly treated by a wide range of predators and scavengers determined to deprive them of whatever it is they have, so they are not quick to trust," notes Schaefer. "But once they accept us, they are very receptive to learning and taking responsibility for their own destinies."

Schaefer and Fife are using the pilot study to train independent judicial managers who will take over all new buildings. Schaefer says Gauteng is big enough to support a judicial management practice and Trafalgar is sponsoring a black empowerment company, headed by company turnaround specialist, Zukile Vokwane. "It is wholly management owned and will be available to any owner or creditor wanting to rehabilitate a sectional title building."

He expects the plan to be applied to a few hundred properties over a five to seven year period before most inner cities are stabilised and prices normalise.

ends