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1.1 Learning Unit 1

4. The place of Commercial Letting in the business

Understanding the place and role of Commercial Letting management in a property management business requires an understanding of the whole Property Management Value Chain. The property management value chain can be explained as a set of business-generating activities like Sales, Rentals, Sectional Title Management, Insurance, and Auctions & Valuations. Depending on the type of business-generating activity, the transaction is supported by various business support functions. From the illustration below, Commercial Letting Management is a business-generating activity, which is dependent on Debt Collecting, Maintenance, Utilities, Insurance, Trust & Accounts Management, Financial Management, and Governance functions.


Although the Commercial Letting Function does not provide a service to other functions, it nonetheless works closely with them.

Utilities

  • The Letting Function provides utility accounts as received from the municipality to the Utilities Function to invoice the amounts owing by the lessee. 

Debt Collecting

  • The Debt collection function facilitates the collection of property-related income and recoveries.
  • Lessors are advised which defaulting lessees need to be given notice and/or be handed over to an attorney.
  • Lessors are advised/requested to write off bad debt to clear old outstanding rental.

Insurance

  • Potential insurance claims are reported to the lessor.  It is the lessor’s responsibility to notify the applicable insurer. 
  • Claim forms may, in certain cases, be obtained and provided to the lessor.
  • The insurance premiums of properties managed are paid to the insurer.

Sectional Title

  • Levy amounts are paid by the Letting function from the rental income.
  • The Letting function facilitates the communication between sectional title schemes and the lessees.

Sales

  • Any lessor wanting to sell, or lessee wanting to buy, is referred to the Sales Function.
  • Sales stock is marketed to lessees and lessors.
  • The Letting function communicates the sale of a property to the lessee.

Residential Letting

  • They are notified of any maintenance/repair issues requiring attention should the property be a mixed-use property.
  • Transfer of funds between properties of the same lessor for various reasons, for instance, the payment of utility accounts.

This section focuses on the role of the Letting Management Function in the Property Management Business.  Other functions in the Property Management Value Chain are dealt with in other training programmes.