Service charge: The ingenious solution

By SAM NJUGUNA

In striving to be financially independent, Kenyans have become just that - independent. Independence has slowly given way to individualism. This individualism has grown into self-glorification which, combined with the success principle of instant gratification, has turned us into a self-obsessed people. We have inherently grown into a selfish short-sighted society.

This journey towards inwardly looking closed-mindedness has been long. It started with the colonial administrative strategy of divide and rule. Communal village housing slowly degenerated into estate housing and onwards to individual detached leafy compounds.

This privacy standard is now manifested by reinforced concrete, masonry-panelled and electric barbed-wire walling erected around individual housing units to keep away nosy neighbours. The old adage that fimbo ya mbali haimui nyoka (a far off friend cannot be of much use in time of need) has clearly lost its sheen.

By and by, this self-centred attitude of success has etched itself into our culture and we have conveniently forgotten that we are all part of a bigger society.

A residential building in Nairobi. Owners of houses in communal residences can co-own one unit and use the rent collected to pay service charges. [PHOTO: JENNIPHER WACHIE/STANDARD]

It is not uncommon to see people dump garbage right outside their gates or toss litter out of their office windows or moving cars. As long as it is out of their personal space, all is hunky dory. Who cares about their neighbour? They can take care of themselves, can’t they?

Communal living

However, it is increasingly becoming manifest that the ways of success don’t necessarily come in single small packages. Communal living is making a huge comeback as single standing residences give way to apartment blocks.

It has suddenly dawned on the urbanites that the resources required to sustain a single-standing mansion are about the same as those required to service multiple residential units.

A stand-alone house, for example, will need one watchman and a gardener during the day and two watchmen and a dog at night; exactly the same resources required for a compound of 32 units in four blocks of apartments.

As Kenyan urbanites relearn community living, a trait that has taken a back seat for a half century, it has not come without challenges.

The greatest challenge, especially for individually owned residential units sharing a compound, is the delay or complete default in remitting service charges. Service charge is a small amount of money used in paying for maintenance of common facilities including security, driveways and gardens.

Collecting service charge is a property manager’s worst nightmare. There are people who are wired such that unless a service is completely terminated, they do not see the need to pay for it. There is either a fire or not. They do not believe in a continuous maintenance regime, what with so many years of perfecting selfishness! Unfortunately, this critical domain is where most Kenyans fall in. Since it isn’t broken, why fix it?

Property maintenance

Fortunately, there is a third way. Simple mathematics. Let us take an example of a tri-block of 24 apartments each worth Sh12 million. If each resident needs to pay Sh2,500 in service charge per month, the monthly total comes to Sh60,000.

The average yield of a residential property in Kenya is six per cent per annum. For a Sh12 million property, therefore, we are looking at an average monthly rent of Sh60,000 per apartment.

The total monthly service charge is, therefore, exactly the same as the monthly rental income of one apartment. Therefore, if the owners of the 23 apartments shared the cost of the 24th apartment, each would purchase theirs for Sh12.5 million instead of Sh12 million. This one apartment would then be rented out singly for the purposes of property maintenance and the residents would never have to raise service charge in perpetuity.

This principle can be doubled or trippled in a given compound, depending on the forecast life cycle costing of maintaining common areas. These ‘escrow’ houses would then be jointly owned by all the house owners through shares in a property management company.

The writer is a development manager.