SERVICE CHARGE MANAGEMENT AND ITS ASSOCIATED PROBLEMS

SERVICE CHARGE MANAGEMENT AND ITS ASSOCIATED PROBLEMS

                                                                            By

                                                   GABRIEL KUYE OLUSEGUN

INTRODUCTION

Property management involves activities that pertain to operating and maintaining the quality of the fabric of the buildings, and to preserving and improving the expected returns from the estate in the line with the clients’ requirements and objectives. The key to maintaining the quality of a property and the associated services lies in having an adequate level of funding by means of levying services charges on the end-users. In fact, it is essentially the appropriate collection and effective administration of service charge funds that distinguishes the management techniques of a multi- tenanted property from that of a single unit building like a detached house or a bungalow. In the pages that follow, efforts were made to treat the problems of service charge administration in real estate practice.

THE CONCEPT OF SERVICE CHARGE

Finance is central to the survival and operating of any business concern. The corporate entity will grind to a halt without adequate finance to maintain itself or for purpose of expansion. Service charge is a compulsory levy collected from tenants or occupiers of property in multiple occupation for the discharge of those liabilities and functions which the occupier would have had to perform if he/she were a sole tenant but which he/she may find difficult to perform due to the existence of several other tenants with similar liabilities. Source of funds is primary in establishing definite procedures for efficient and effective management of any real estate asset. Apart from the rental income, service charge provides the needed cash flow necessary to meet the operating needs and that the resultant regular income flow the property owner.

Ekumankama (1992) defined service charge by subdividing it into two major parts; explaining that service charge is a comprehensive terminology involving service charge deposit and service charge cost. He further explained that service charge deposit is a provisional estimate at the beginning of a service charge financial year of the cost of service usually obtained at the end of the service charge financial year. For instance, the lease of a property in single occupation like a detached house would normally provide that with same septic tanks and soakaway pits, but it may not be practicable as the tenants may be busy arguing about how to go about it, who employs the contractor and who pays what. Each tenant would also covenant to maintain the lifts, air-conditioners, the generator(s), etc., but these would probably be grounded while occupants are arguing about who should liaise with the contractors or the proportion of their financial contributions. In the long run, both the occupiers and property owners suffer the ugly consequences. This is the essence of service charge, the contribution of which must be clearly stated at the time of letting, that is, in the initial letter offering the subject premises and finally rooted in the lease.

In the light of the foregoing, service charge could be regarded as the cost to the tenant of indemnifying the landlord against actual and anticipated expenditure of the protection, maintenance, repair and replacement of those parts of the structure, finishes and equipment of the property for which the tenant is directly responsible; such costs being calculated in accordance with and to the element provided by the terms of lease between the landlord and tenant in each case. From this definition, it becomes apparent that service charge effectively covers two major elements namely, works and services. Works include maintenance, repairs and replacement of the building elements as at when due.

Service charge management is one of the professional services rendered by a management surveyor either in private or public service. The management surveyor may be working as an Estate Surveyor in private practice and may be briefed by a private client to manage his/her property in multiple occupation. The Estate Surveyor may be an in-house management surveyor working for a property owning parastatal and may be asked by his/her employer to manage their tendered property in multiple occupation. In each case, service charge management becomes part of his/her management responsibility. A problem may arise if the property is an old one and the tenants/occupant have not been paying service charge. It becomes most difficult to introduce it at this stage as most tenants view such with suspicion and regard it as an indirect way of increasing rent. They need to be educated on the need for a service charge before they could be convinced, if at all. If it is in a situation where the property market is a market is a tenants’ market, the tenants may threaten to quit at the expiration of the lease and you can be sure the landlord will tell you to forget about this service charge palaver. The situation becomes better where the tenants are selected by the management surveyor who now has the opportunity of incorporating the service charge in the lease agreement. In such a situation it becomes binding on tenants from day one.

The service charge year is normally for a period of twelve months and is for the period services are rendered. At the end of each service charge year, the management surveyor will calculate the cost of common services to be provided in the forthcoming year including staff emolument and other incidental expenses. At the beginning of the anniversary year, the service charge is introduced to the tenants who now pay the amount for one year. This is normally referred to as service charge deposit. At the end of the year, the surveyor renders an account of his income and expenditure with regards to the service charge year. Any deficit in the deposit is normally demanded from the tenant. Should there be any credit balance, this is carried over to the next service year and the tenant will pay less the said amount in the new service charge year.

SERVICE CHARGE AND LEASE AGREEMENT

As much as possible, the lease should be perfected before tenants take possession to ensure enforceability. The authority to collect, retain and disburse service charge must be tied up abnitio, at the time of executing the management agreement. This must also be expressly stated in the letter of offer when any lease is being contemplated since the letter of offer forms the bedrock of the lease. It must also be unequivocally stated in the letter of offer that the amount demanded is merely a deposit for a service charge year subject to balancing payment or refund at the end of the service year. It should further be entrenched in the lease agreement that the service charge is adjustable upwards or downward at its anniversary as actual costs of providing the service may justify. In this exercise however, care must be taken when drawing up the lease to ensure that all practical problems usually encountered in the day-to-day management of properties as a result of poorly drawn up lease agreement is minimized. In order to achieve this, the lease agreement must be correctly drafted with the responsibilities of the landlord, tenants and managing agents clearly defined including the following:

a. Provision for payment of service charge: In order to avoid problems that may arise, service charge payment should be made in advance annually to avoid the problem of funding services with borrowed funds pending the collection of arrears, or in the alternative, deferment of the much needed repair All foreseeable disputes that may prompt either the non-payment or delayed payment, should be avoided. Such could be avoided by involving the occupants in the ratification or approval of the service charge budget.

b. Item of expenditure to be included: the landlord or the managing agent cannot charge for what is not agreed upon. Therefore, the insertion of relevant service charge items is of vital Some lease agreements provide for a comprehensive list, setting out the specific items of expenditure with possibly a sweeper provision to allow general formula like simply stating that the service charge is for the maintenance of facilities provided in the property as well as maintenance of common parts. The danger of the comprehensive list is the failure to include wordings which will cover changes in the pattern of services while the danger of the general formula is that there is doubt over what is included, for example, does the cost of maintaining the air-conditioners cover the replacement of burnt fan motors? Items usually covered under the service charges are:

• Maintenance and repair of lifts and air-conditioning system
• Maintenance of standby electricity generator
• Provision of security
• Cleaning and lighting of common parts
• Clearing of septic tanks and soakaway pits
• Pest control and rodent eradication
• Maintenance of fire fighting system
• Repair and redecoration of common parts
• Refuse disposal
• Furnishing of common parts and maintenance offices
• Compliance with statutory provisions in relating to fire or other hazard (like display of fire notices).
• Employment of staff for the efficient management of the building
• Maintenance of sewage treatment plant
• Servicing and repair of transformers and electrical panels
• Repair and maintenance of water pumps/borehole
• Any other services to be jointly offered to the tenants
• Management fee

The above schedule is by no means exhaustive but it contains most of the items under service charge.

c. Accounting and certification of charge: It is normally entrenched in the lease agreement that a service charge account, which is a fair summary of the expenses duly certified by the issuer, should be given to the tenants or occupants at the end of each service charge year. It also provides that the certificates shall be conclusive and biding upon the tenants on the matters certified therein except in the case of a manifest error. However, a number of tenants, finding the last provision acceptable have argued that the lease should also provide for the account to be audited and further certified by auditors, so that it could be binding on them. The auditor’s fees will also form part of the service charge account.

d. Apportionment of service charge and collection: A fair and equitable method of apportioning the cost of running the services during the service charge year must be provided for in the lease The usual basis of apportionment in the case of leases for residential properties is units of accommodation, say flats. In commercial lease, it is usually based on lettable floor space of the subject property and multiplied by the floor area (usually expressed in square metres) occupied by the tenant. It is also necessary for the lease agreement to provide means of ensuring collection after the charge has been apportioned.

It is pertinent to mention that there are three factors which affect the payment and collection of service charge legally, namely: statute, the lease, and case law. In Nigerian, there are as yet no laws of service charge. There is no known decided case specifically on service charge. The drafting of the lease agreement to properly cover service charge is therefore very important as it is presently the only instrument for enforcement.

BUDGETING, LEVYING, COLLECTION AND OPERATION OF SERVICE CHARGE

The Estate Surveyor managing a property which is subject of service charge payment will before the beginning of the service year estimate the cost of all the items to be covered by the service charge account. The total of this estimate is apportioned to each flat on the basis of equality of accommodation. If the total service charge for the year is estimated to be Nx. and No of 3 bedroom flats is 12 in number, each flat charge will be ^Nx/_12. If a tenant occupies 3 flats, his charge will be 3 x N/12. The service charge is usually paid in advance on a common anniversary date. The budget is usually provisional and tenants payments regarded as deposit. The details had been earlier discussed. Account is usually rendered to the tenants at the end of each year to enable them know how their money has been used. It also explains the justification for extra request in case of budget deficit.

According to Akwaeke (2002), it is imperative that a provision is made at the onset for a fair and equitable apportionment of the cost of servicing a multi-tenanted property. The first step to take before apportionment of costs of services is to know how much will be spent in the next one year on services. This is otherwise known as service charge projection. Since there could be a significant variation in costs, the best a management surveyor could do is to estimate based on his past experience with respect to the building or similar ones in the neighbourhood. The annual estimate could then be shared amongst occupiers in direct proportion to the floor space occupied by each tenant. The foregoing method is a way of apportioning cost of services amongst occupiers. However, apportionment based on area of floor space has its weakness. For example, the extent of use of services by a tenant may not necessarily depend on the floor space occupied. While a tenant of ground floor or first floor would hardly use the lift, the tenant on the 3^rd floor could hardly do without the lift. However, since it is almost impossible to arrange apportionment to be completely fair, some measures of fairness could only be maintained. The aim should be to produce an overall result, which to the reasonable man appears as fair as possible. It is also to wait till the end of an accounting year when all expenses on services would have been incurred and the total cost ascertained, before the apportionment is done. This arrangement has the advantage of sparing the management surveyor the trouble of having to do estimates, which may after all, due to cost varieties, be inaccurate.   So long as the expenses are certified to be proper and reasonable, the cost is shared out between occupiers. However, this method could not be recommended in this country where security of tenure is in most cases minimal and there could arise difficulty in funding maintenance of services where landlord is not willing to give out adequate money from accrued rents, pending the new accounting year when tenants would pay for services. When an advance deposit is made by the tenant based on reasonable annual estimate of costs of services by the management surveyor, each tenant/occupier is credited or debited at the end of each accounting year (Akwaeke, 2002).

The determination of service charge rate is such that a number of factors actually play important roles in determining how much service charge the managing agent should demand from the occupiers. Some of these factors are:

• The age of the property since the older the building, the more the problems that may likely arise from electrical and plumbing installations.
• Design and general landscape of the property as complicated designs are usually more difficult to maintain that the very simple ones.
• The age of mechanical/electrical installations such as generators, air-conditioners, pumps and other ancillary equipments. These equipments become more expensive to maintain as they grow older.
• The number and size of installations as in the case of expenses increasing with the number of installation.

The operation of service charge arrangement involves some important areas which include:

• accounting, budgeting and forecasting
• taxation
• relationship between landlord and tenant
• apportionment of service charge
• method of payment

On rendering the service charge account, the management surveyor or agent should attempt to:

1. maintain charges at a reasonable level
2. maintain and improve standards
3. give advance notice to tenants of any major expenditure undertaken and produce detailed standardized service charge accounts with and accompanying explanatory notes to the service charge account.

The management surveyor forecast future service charge by way of adding known works to inflation and the estimate of present year, by an annual inspection by the managing agent or building surveyor in order to estimate the likely expenditure and a planned maintenance programme and to spread the cost of the accruing capital over a period of time. The tenants on their part, who may have no direct management responsibility, must give their appropriate contributions to enhance the service charge scheme. They also provide information through a formal channel such as a tenants’ association or a committee. In apportioning service charge, there are 4 (four) main methods, which according to Akwaeke (2002) and Chinwuba (n.d). These are apportionments by the rateable value, floor area, anticipated use and fixed proportion. Occasionally, the method could be based on fair and reasonable assessment, total lettable rent and negotiated discount.

THE IMPORTANCE OF PROVIDING FOR SERVICE CHARGE IN MULTI-TENANTED BUILDINGS

The improvement and effective maintenance of every kind of real estate assets is a major goal of service charge administration. To this end, the provision of services in a multi-tenanted property and which is centrally coordinated will ensure the economic use of such services. Buildings of this nature are usually occupied by different tenants from different economic and social backgrounds. They also have varied interests in the property which they respectively occupied. Service charge provision is therefore important and must be reckoned with in any multi-tenanted buildings. According to Akwaeke (2002), the importance of service charge provision include the following:

a. The imposition of service charge on the occupants of a building confers on them the right to know how such fund is utilized. The managing agent is usually under pressure to see that funds derived from service charge imposition is spent judiciously and in the best interest of all the parties A proper service charge account must therefore state all moneys received and how it was spent to ensure accountability.

b. The provision of service charge makes room for expertise in its administration and/or application by the managing agent. The managing agent has the authority to collect, retain and operate the service charge account. This onerous task of administering the service charge should therefore be left in the hands of an expert.

c. The prevention of undue deterioration of the services/facilities is enhanced as service charge provision ensures that funds for maintaining essential services and facilities are made available at all times. It therefore ensures that proper and adequate maintenance of such facilities and services are not left at the mercy of the landlord or uncaring occupants. If prompt attention is not given to required maintenance, repairs and efficient running of services in a property, the possibility of having to carry out such works at greater cost is not far fetched due to inflation or further compounding of any emerging problem in the subject property.

d. It is imperative that a single unit of control is set up to ensure the provision of service charge in order to avoid clash of personalities and interest in the property. Tendencies that building occupants might not coordinate themselves properly towards effective administration of service charge in a property are very high. The managing agent is therefore remains the best individual to bridge the gap amongst various interests in the subject property.

PROBLEMS INHERENT IN SERVICE CHARGE ADMINISTRATION

The problems of service charge are multiple and vary from property to property. The major ones are outlined below:

• Tenant’s factor: In a multi-tenanted building for example, where there are different kinds of occupants, it is always common to have one or two occupants failing or out rightly refusing to meet his/her service charge obligation. Eventually when same is paid, it is belated and this undue delay payment has negative effect in the proper administration of service charge. There was an instance where a tenant vehemently refused to pay his service charge and all the efforts made to persuade him to pay proved abortive.
• Landlord’s factor: The landlord being the owner of the property would sometimes like to assume lordship over affairs of service charge administration thereby interfering with the job of the managing surveyor, who is supposed to be given a free hand in managing the subject This overbearing attitude of the landlord causes friction in service charge administration as the advice of the managing agent is often jettisoned. There are also cases of deliberate delay in making decisions and taking actions on issues regarding replacement of obsolete and/or damaged facilities on the part of the landlord. Since this landlord’s responsibility with regard to certain building repairs and maintenance is capital intensive, he sometimes delays or refuses to act as may be appropriate. This neglect of responsibility will definitely have negative impact on the efficiency and proper functioning of the facilities concerned. Worst still, some landlords will not agree to set aside sinking fund for future repairs and replacement of critical and costly facilities, as they regard this practice as an unnecessarily tying down investible funds.
• Landlord’s delay in approving jobs: The importance of prompt attention to tenants’ complaints cannot be overemphasized but the managing agent’s effort towards achieving this is sometimes frustrated by the landlords’ delay in approving the requisite jobs. Some landlords insist on approving major repair jobs whether they are strictly service charges items or landlord’s repairs. Some clients could make very useful suggestions when they are involved. Their involvement could also protect the agent if the rationale for certain expenditures are queried but whenever there is delay in getting approval from the landlord, the management surveyor may have the difficulty in explaining this situation to the affected tenants. Such delays are sometimes due to lack of trust and the client to take all the time to try and confirm prices personally even for urgent repairs. The managing surveyor can only continuously emphasise the need for an urgent consideration of quotations for landlord’s repairs.
• Contractor’s factor: Contractors can be on retainership or contracted for a specific job only. In each case, quotations are usually submitted to the managing agent, who scrutinizes same before awarding the It has been observed that contractors usually submit a very high quotation for jobs to be executed.
• Management Surveyor: As earlier mentioned, some Estate Surveyors encounter problems because of inadequate knowledge and expertise in forecasting, planning, coordinating and controlling the various aspect of service charge administration. Due to the dishonest attitude of some management surveyors, they connive with contractors in inflating contract sum thereby increasing running cost for the service charge account.
• Economic factors and government policies: Without doubt, inflation plays a negative role in the economy of any country. In Nigeria, the rate of inflation has always been high since the 80’s and this has also affected the cost of building Consequently, the cost of maintaining/repair of facilities will be high and this eventually affects the service charge account. The continuous changes in government policies also affect charge administration. For example, the price of diesel have been increasing for the past two decades and this has its resultant effects which include labour strikes, scarcity of the commodity and diversion of the product via smuggling. It is pertinent to point out that low power supply from NEPA results in high use of generator, which also affects the demand for diesel, which has already been pointed out as being scarce intermittently and also costly.
• Irregular payment of service charge: Some tenants are not good at payment of service charge as they regard it a subtle way of increasing rent by landlords and/or Estate agents.
• Difference between service charge deposit and actual cost: Occasionally inflation could cause charges in budget estimate. In such a situation, it becomes difficult to call the tenants to make up the service charge balancing account. This situation gives a lot of problem especially when it is not clearly differentiated in the agreement.
• Replacement of capital intensive such as generators and lifts: Some schools of thoughts have argued that such items should be regarded to be on lease to the tenants. The argument makes sense especially when such conditions are taken into consideration in the rent agreed.
• Improper on non-accounting of service charge deposit by management firms: This is a breach of trust and will make the tenants not to be willing to pay service charge for the following year as a result.
• Fraudulent practice by office assistants: Some of the field office assistants pilfer a lot, they often steal items like bulbs and engine oil from the store. In some cases, they may give you inflated prices during market survey just to make extra money for themselves.
• Inflationary trends: The effect of the global economic meltdown is affecting every sector of the economy and the real estate sector is not immune from it. The immediate effect of this is the continuous fall in the value of the nation’s currency – the naira, thus depleting its purchasing The obvious effect of this is that it becomes more difficult to have an accurate budget.
• Tenant’s insolvency: The economic situation continues to grow worse; it becomes more difficult for same tenants to meet up with their service charge It takes much threat or persuasion to make them pay up. This often delays the carrying out of services of common interest to the tenants.
• Theft: This is also a serious problem. Fire extinguishers, electrical fittings, and water pumps are the main targets. The solution is for the security staff to be on alert at all times. Some of the maintenance gang could be thieves and they have to be checked as well.
• Operation of common services: The duty of the management surveyor in service charge management does not end with the collection of the service charge He also has the duty to give the tenants value for their money by the quality of services rendered. He should be cost conscious and always endeavour to bring expenditure within the service charge budget. For the lift equipment and electricity generating set where such is available, a maintenance contract agreement should be signed with maintenance companies specializing in maintenance of such equipments. The organisation should also have maintenance team with different technical skills for the carrying out of minor repair work. The passenger lift and electricity generators should have operator who will be responsible for routine upkeep and operation of the equipment. The service of a security company may be contracted for the security of the premises.
• Cost control: There are few things are difficult as management of other peoples’ funds and the reason for this is because there is always the feeling that the money is not being properly utilized for the purpose it is meant for. Your account is always queried and you are put on edge defending your expenditure. For these reasons, it is imperative that every management surveyor be prudent in spending tenants’ money to avoid denting his The management surveyor, due to pressure of work, will always send his assistants to find prices and make purchases for him and these assistants could be fraudulent. They often inflate prices and steal items to make personal monetary gains. To avoid such ugly incidents, the management surveyor should always crosscheck prices and take inventory of items for common services; the assistants could be as petty as to remove items from working installations, like water pump, fluorescent tubes, generators, etc. The management surveyor should always compare quotation from different contractor/suppliers to ensure that tenants get value for their money.
• Inadequate funds: This is a major problem which is assuming dangerous dimension with the value of the naira dropping and as an oil subsidy gets It can also come due to improper budgeting or poor budgetary controls. What does the management surveyor do when he finds out that the whole service charge money is exhausted before the end of the service year considering the fact that the key to successful maintenance lies on having an adequate level of regular funding? The Management surveyor must look for money to keep the services running. In such circumstances, he may do the following:
  • Reduce expenditure as he finds the money running down.
  • Prepare an interim, service charge account before the money is finally exhausted and sent to tenants demanding supplementary payments with details of possible breakdown of services in case of non-payment. It could be a difficult task getting tenants to pay; some will pay and others may not.
  • Obtain credit facilities from the bank after informing the tenants. However, this action should be taken as a last resort as the total service charge will be further increased by the interest on such loan.
• Difficult tenants: All tenants will easily pay the first service charge at the time of moving into occupation and the difficult ones will pay subsequent Some will say they cannot deposit such amount of money with the agent at the beginning of the year and will continue to pay by installment. In the case of non-payment, legal action should be taken to terminate the lease and recover outstanding debts since in the liability for payment is usually properly incorporated in the lease agreement. But it may not be worthwhile considering t he duration of cases of this nature in our law courts. The alternative, after all diplomatic approaches fail will be to make the tenants’ occupation, as much as possible, uncomfortable by cutting off all supply and by not attending to any problem affecting defaulters. However, some of these are jungle methods for which the manager could be sued; nevertheless they help to check delayed payments. The incorporation of interest on delayed payment of service charge in the lease will also deter those difficult tenants from even paying by installment as the interest will eventually increase the total charge for them.
• Incidence of withholding tax on service charge: This is one problem which has often led to series of correspondence and The Finance (Miscellaneous Taxation Provision) Decree No. 4 of 1985 provides for the deduction of withholding tax which is presently 10% at source on any payment of rent, royalties, interests and dividends and most corporate tenants often insist on deducing withholding tax from service charge as they do from rent. This problem can be overcome first by clearly stating in the lease agreement that the charge is “in addition to the rent” and not as an additional rent and also by continuous enlightenment as to the real meaning of service charge.

SUGGESTIONS

• Rational choice of tenants: It is very important that there should be careful selection of tenants by the managing firm based on their enormous experiences of tenants’ behaviour over the years. The ability of the tenants to pay their rents regularly and promptly is very essential in addition to keeping their lease covenants. In general, selection of tenants should therefore not be considered on the merits of political and/or social standing only.
• Encouraging planned preventive maintenance: Maintenance is basically a cause and effect It is more economical to eliminate the cause than tackle the resultant effect. It has been noted that non-planning of maintenance works has in no small way contributed to the huge amount of money in maintenance, it is very necessary to encourage and adopt the method of planned preventive maintenance which entails periodic inspection of properties upon which schedules of repairs or dilapidation are prepared on noticeable defects. This is one of the most effective means that the managing firm may employ in minimising expenditure on initial budget. This method has helped to reduce complaints from tenants before they are aware of any defect. It has as well helped to minimise any inconvenience likely to be suffered by the occupants of the premises. Records of repairs should be kept and cost accruing be noted as this will make it easier to see at a glance the areas where costs are rising.
• Needs for service staff on site: The need for keeping a maintenance crew on site by the managing firm cannot be overemphasized as they re able to attend promptly to complaints and maintenance problems requiring urgent attention which is within their capability to Keeping maintenance records, carrying out routine inspections to check against breach of covenants especially with state of repairs and use of property should also be part of the duty of the maintenance crew on site.
• User: Control has to be effected here to see that the use for which the property was leased is not changed to the detriment of the property. A change in use might lead to a loss in value. The way to effect this is by making sure that the lease covenant is enforced.
• Controlling operating costs: There is the need to control operational costs such as outgoings involved in the running of their property. The Estate Manager must try to cut down operating costs so as to increase profits; decisions such as whether to use gloss paint and paint the building every years or use emulsion paint and paint every other year. The decision he makes depends on the standards the Estate Managers intends to achieve. The surveyors should also scrutinise and cross check prices given to him by his assistants or suppliers to give the tenants value for their money.
• Tenants involvement in service charge administration: Quotations for major repairs that strictly fall under service charge should be sent to all tenants or pasted on strategically located notice boards for consideration with a period stipulated (depending on the urgency) within which their comments should reach the agent. Prompt approvals for jobs will also save additional cost that could arise due to inflation or further deterioration when approval is delayed.
• Better relationship between tenants and managing firm and amongst tenants: Breaches of covenants represent one major area where there might be problems between the tenants and managing Thus to maintain good relationship, important matter as regards breaches may be ignored or raised informally with the tenant. However, a major beach must be handled firmly, as it is a principle in estate management parlance that no action should be started unless it is intended to be followed to its logical conclusion. Complaints by tenants against the landlord or the managing firm should be settled as quickly as possible as long term problems should not encouraged. The landlord or managing firm should steer clear of complaints by tenants against each other unless his own interests are in any way affected. In essence therefore, there is the need for cordial relationship to exist between the managing firm and the tenants on one hand, and between the tenants themselves on the other. Since some tenants do not know or refuse to agree that it is their responsibility to pay service charge annually, it is therefore recommended that the duty of the estate manager is to educate them on same prior to the conclusion of the lease transaction. Landlord should also not be left out, as he should be reminded of his own obligations towards the property at all times. In circumstances where the tenant bluntly refused to pay his service charge, the management surveyor can withdraw all the services from the enjoyment of the particular tenant. If the above fails, then a quit notice can be given to the defaulting tenant.
• It is very important to carry out market survey in order to crosscheck quotation submitted by contractors to avoid inflated prices at the detriment of the landlord and This market survey will also help management surveyors to keep track of prices of building materials. In fact, information technology is recommended and should be embraced by estate managers for efficiency and accountability in services charge administration. Management surveyors should not hesitate to replace erring contractors, who are dishonest or incompetent even if they are close friends or relations of the surveyor. Management surveyors on their own part should uphold the motto of the Nigerian Institution of Estate Surveyor and Valuer (NIESV), which is “Honesty and Devotion” as their watchword in managing properties under their care.
• The Nigerian Institution of Estate Surveyors and Valuers (NIESV) should lobby government to remove or reduce duties and tariff on building materials, and also persuade government to continue subsidizing the prices of petroleum products as these will ease the heavy cost involved in maintenance work and supply of diesel.

CONCLUSION

The management of common services in multiple occupied properties has been growing over the years and has become an important aspect of the duties of the management surveyor. For the management surveyor to succeed in his job, he must always bear two things in mind:

i. That the duty of a management surveyor is an inglorious one. The tenant is never happy with him nor is the landlord. He never receives a pat on the back no matter how he strives to satisfy both parties. His reward is probably in heaven.

ii. He must always bear in mind that his management duties have two aspects; the building aspect and human aspect. He cannot collect his fees unless he collects his rents. For tenants to pay their rents promptly t hey must be happy with him. To make their satisfaction and account for all money collected by him. The management surveyor must resist provocation no matter how His job cannot be said to be an easy one, but he must strive to make his job easier.

Finally, service charge is very important in any multi-tenanted property for the proper upkeep of such properties. Though, some factors hinder the effort to achieve sound delivery of service charge administration, it is however, apparent that all the hindrances can be ameliorated if some necessary actions are put in place such as the above-mentioned recommendations. From the foregoing, achieving a better service charge administration is not far-fetched, as all the militating factors can be overcome by a resilient and experienced management surveyor.

REFERENCES

Akwaeke, O. S. (2002). Re-engineering service charge administration in multi-tenanted commercial properties. Being a Critical analysis/thesis submitted to the National Council of the Nigerian

Institution of Estate Surveyors & Valuers in fulfillment of test of professional competence for admission into corporate membership of the Institution.

Arowolo, S. O. (1989). The concept of service charge in property management. Jos.

Bassey, O. E. (1992). Practical property management. Paper presented at Knight Frank & Rutley (Nigeria), Branch seminar.

Chinwuba, R. O. (n.d.). Problems of service charge management. Being a critical analysis/thesis submitted to the National Council of the Nigerian Institution of Estate Surveyors & Valuer in fulfillment of test of professional competence for admission into corporate membership of the Institution.

Ekumakana, E. T.(1992). Service charge administration. Being paper presented at a seminar organized by the Lagos State Branch of the Nigerian Institution of Estate Surveyors & Valuers.

Eric, S. (n.d.). Service charge and Sinking fund published by RICS on Audio tapes

David, A. O. (1992). The problems of service charge administration in multi-tenanted office blocks. Being a Critical analysis/thesis submitted to the National Council of the Nigerian Institution of Estate Surveyors & Valuers in fulfillment of test of professional competence for admission into corporate membership of the Institution.

Nwankwo, P. C. (1986). Property management – A practitioner’s overview. A paper delivered at the workshop on Property Management.

Sangosanya, A. G. (1983). The economics of property management in Nigeria. The Estate Surveyors and Valuers, vol. 17.

Welborn, P. J. (n.d.). The procedures in establishing a systemized day to day management strategy in an existing multi-occupied office building. A critical analysis submitted to the National Council of the Nigerian institution of Estates Surveyors and Valuers in fulfillment of requirements for election into the corporate membership of the Institution.

Withholding Tax Decree: Finance (Miscellaneous Taxation Provision) Decree No. 4 of 1995.