The two-year-old Community Schemes Ombud Service (CSOS) has already lost some R80m of homeowners’ money. While the CSOS was established to protect owners and tenants in community schemes, it has instead placed them at risk and lost the monies which were paid to ensure its proper functioning.
“Ironically, the CSOS finds itself in a position where its own audit has moved from qualified to adverse, when it is mandated to check each and every registered community schemes’ audited financials,” said Chris Renecle, MD of Renprop. “In addition, there are further reports of unauthorised expenditure running into millions.”
The CSOS recently announced the suspension of its acting Chief Ombud, Adv. Seeng Letele and Chief Financial Officer, Themba Mabuya, with effect from 3 September 2018, “following allegations of gross negligence, dishonesty and dereliction of duty in regards to an R80m investment in VBS Bank and failure to provide relevant information to the Board relating to the investment of surplus funds”, according to a recent press statement.
Renecle said CSOS is not meeting its requirements to property owners who pay the monthly levies for its services.
“Our experience of the two-year report card has been that adjudicators arrive late or not at all for hearings,” he said, noting that poor decisions that are made in adjudication are being referred to the High Courts for relief. “This is costly and counterproductive, and can potentially be stuck in the system for a number of years. There is also non-adherence to its own practice directive timelines. All of this means that managing agents are spending an inordinate amount of time managing their clients’ interests at their own cost and time.”
Renecle believes that from the outset the CSOS has been overprovided for, and is nothing more than tax creep. Renecle explains that the monthly levies paid by homeowners on the Renprop book to the CSOS averages between R30 and R40 per unit for a limited service.
“Managing agents, by comparison, only charge R70 to R100 per unit per month for a 24/7 service,” he said. “So why is the CSOS levy so high?”
To date only a small number of the approximately 200,000 community schemes have registered with CSOS. How much money will the CSOS have to spend when there is full compliance and all schemes are registered, asks Renecle, and who is guarding the guardian?
“Word on the community scheme street is that owners may well boycott these levies. This is a mess that could easily have been avoided,” said Renecle.