CONCEPT OF PROPERTY MANAGEMENT

CONCEPT OF PROPERTY MANAGEMENT

The definition of property management depends on the perspective from which the concept is viewed. In effect, landed property management is the management of land and buildings in such a way as to secure the maximum advantage (Odudu, 1987). It can be defined as the direction, nursing, sometimes the overall control of policy of an interest in landed property with a view to obtain a maximum return. The return may be in the form of financial benefit, social benefit, prestige, political power or a combination of these benefits Ajagbe (1993). Narains Corp. (2007) defined property management as  “the range of functions concerned with looking after buildings, including collection of rents, payment of outgoings, maintenance including repair, provision of services, insurance and supervision of staff employed for services, together with negotiations with tenants or prospective tenants”. Smeby (2012) defined property management as “the science of getting maximum value from the investment made in assets by assuring proper utilization, preventing loss and pilferage and all other aspects of security-related issues, scheduling timely maintenance, tracking physical location, maintaining proper insurance coverage, and scheduling depreciation write-offs.”

Banfield (2014) states that “property management is frequently described as a profitable operation and management of owned, leased or subleased real property including land, buildings, assets, equipment and legal commitments for an owner or developer”, while Marie (2013) defines property management as “an activity that ensures that land and buildings are dealt with so that they operate efficiently and effectively.” A landlord is a person or organization that rents out real estate holding the rights to receive the rentals paid by the tenants. Long before the modern technology and the dawn of industrial era, humanity occupied only a fraction of the lands it does today. Then came feudalism where powerful members of the society were granted titles to land by the King and they were referred to as “lords”. Noble landholders considered to be the lords of their subtenants and anyone inhabiting their land. All land owning lords demanded rents and started to buy and sell leases of land and the landed lords were called landlords. Wootloth (1997) indicated that this means self-management of property come from way back and has always been there since these landlords were self-managing their properties and no one managed them on their behalf.

Property management is a wide subject and may not be adequately explained by mere application of a definition. As a discipline, it concerns itself mainly with decisions on planning, control and use of land with the primary aim of securing optimum returns. The management of real properties requires a written management agreement between the property owner and the manager. The management agreement is a comprehensive and detailed agreement outlining the responsibilities of both the owner and the property manager (Nwuba, 1994; Barlowe, 1978; Thorncroft, 1965).

 

Property management is necessary in both private and public properties to keep them in a tenantable condition and good state of health. Internal parts of properties as well as the external parts require proper maintenance to keep their qualities intact and enhance their values. Without programmed property management, decay will set in and property will depreciate in value. Property management can therefore be defined as the process of keeping a property in a good state of health, devoid of decay and in other to enhance the value of the property, yielding optimum returns on investment. A good property manager must be proactive, sincere, unbiased against the tenants and landlord, knowledgeable and ready to live above board (Oyedele, 2013).

 

In general property management industry in Botswana strives for growth. Over the years, estate development has been on the increase in Botswana. This undoubtedly is creating more opportunity to property managers. Jensen (2017) indicated that property management industry has been faced with challenges and opportunities over a period of time. These challenges have an effect on property managers, landlords and tenants. Self-managing landlords are faced with challenges and do not know how to professionally tackle them hence the need for property managers.

2.2.1  SCOPE OF PROPERTY MANAGEMENT

The property manager is concerned chiefly with the interpretation and implementation of the owner’s policies in practice and at times, gives advice on the probable effects of alternative courses of action, which might be proposed. However, the property manager must protect the interest of his client by ensuring financial and legal protection, protection of useful life of the property and against unforeseen events (Hemuka, 1990). Property managers offer a variety of extensive services and shoulder varying degrees of responsibility in the performance of their duties to the owners and tenants. Property management responsibilities relate to the overall operation of property investments. These include (Nwankwo, 1995; Olayonwa, 2000; Ibrahim, 2014):

i.    Determination of rental values, collection of rents, keeping and rendering accounts for rents collected.

ii.   Keeping property records and register that will provide necessary data on the property. This includes details of ownership and tenants, location, address, details of rent reviews, option to renew, long range diary of events, etc. The records should be kept in a manner that the events could be picked up and acted upon in a good time.

iii.  Dealing with selection of tenants, renewals, termination, negotiating and agreeing terms and ensuring that tenancies/ leases/ sub-leases are appropriately documented and where consents are required ensuring that such consents are obtained.

iv. Ensuring that covenants both in a head-lease, in a certificate of occupancy or other forms of conveyance, are observed and performed including payment of ground rent and other development charges.

v.      Dealing with tenement, general, water rates, ensuring collection from those liable to pay and those payments are made promptly to the relevant authorities.

vi. Advising on adequate insurance policy for the property, reviewing the sum insured at required intervals and ensuring that the premiums are paid regularly.

vii. Dealing with maintenance and repairs, which are the responsibility of owners and ensure that whoever has such liabilities undertakes them.

viii. Where services are provided such as in blocks of flats or in other multi-occupied properties, ensuring that such services are run to the satisfaction of both the owners and tenants. This will also involve the determination and collection of maintenance fund otherwise called service charge and sinking fund or provision for future replacement of some services like lift, lights and pumps.

ix. Selection and supervision of staff engaged directly and exclusively for a given property. This will consists mainly of porters, lift operators, cleaners, electrical and mechanical technicians. Where these services are contracted to specialised organizations; the property manager will negotiate, agree terms and enter into service contracts.

x. Periodic inspection is an important part of management control. Their frequency would depend on the length of the lease, value of the reversion to the landlord and finally the class and type of tenants.

xi.Other management functions such as reviewing and advising on redevelopment, refurbishing and re-adaptation, on disposal, acquisition and conservation of properties.

In summary, the effective execution of the activities enumerated above will guarantee that the property is managed in such a way as to ensure security and regularity of adequate returns on the investment, that the property fulfils the purpose, need and requirements of the users, that the property is in good state of repairs and regular maintenance, and that the property has a long economic lifespan.