New specialist property financier, ZDFin to bridge the gap for community schemes

Looking for bridging finance and smart financial solutions for community schemes? Keep reading.

In a space where few specialists play, one would need loads of passion, purpose and guts to not only launch a new business in the current conditions, but also in a sector... created in part, by recently enacted legislation that is well-intentioned, but complicated.

Michael Schaefer, founder and CEO of ZDFin, a specialist property finance business, has done just this.

A former director and shareholder of the country’s biggest residential property administration company, Trafalgar, Schaefer recently left the business his father started over 50 years ago, to set up ZDFin.

Aimed at an area he considers grossly underserviced - residential juristic entities, mainly sectional title bodies corporate, homeowners associations and share block companies - he saw a gap in the market to cater for schemes that need bridging finance and smart financial solutions, that could in the long-term, lead to financial savings, whilst ensuring maximum value and enjoyment of one’s property.

It is estimated there are 65 000 sectional title schemes in South Africa with the minority of these being serviced by recognised property management companies.

Michael Schaefer, founder and CEO — ZDFin

When the Sectional Titles Schemes Management Act was signed into law in October 2016, it turned the lives of body corporate members upside down. Regulations in the new legislation make it mandatory for every scheme to have a 10-year maintenance plan. It must be approved by the owners at the annual general meeting (AGM), must detail projected works and provide the computation for levies. The challenge is that definitive plans are often not practically affordable.

The upshot of the Act is that sectional title schemes have to reassess levy contributions and critically, build up separate funds for reserve spend - on top of day-to-day expenses. This has created a nightmare for many trustees who have little or no experience in 10-year maintenance plans and how to finance them.

Schaefer estimates the body corporate business, currently a fragmented market, to be a R1 trillion industry in South Africa. With the combined specialist knowledge and experience of property law, finance and building engineering, the team at ZDFin are able to bridge the gap for community schemes, providing finance, expert guidance and action plans, to address maintenance challenges whilst meeting legal obligations.

It’s not guaranteed that trustees, many of whom are well-meaning volunteers, will either have the skill or get the support and advice to make the best financial decisions for the property.

Schaefer says there is seldom any argument among trustees (now more accountable as a result of the legislation), that money has to be spent on long-term maintenance, but the burning question is what to prioritise and how to fund this.

He adds, “the legislation is good. Sound-building management is at the bedrock of our democracy. If buildings aren’t managed properly they can deteriorate very quickly. Sectional title owners have to be guided through the legislation and separate short-term and long-term expenditure priorities, but often they struggle to accurately assess these and aren’t able to finance the budgets sustainably. The financing of long-term maintenance will increasingly impact property prices.”

From my years in property management, I believe that members deserve effective management, including professional maintenance, not driven by penny-wise and pound-foolish decision-making. This is the space where ZDFin hopes to make its mark.

Michael Schaefer, founder and CEO — ZDFin

If you're interested in smart solutions for Sectional Title Bodies Corporate, Home Owners’ Associations and Share Block companies, visit www.zdfin.co.za for more information.

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