As Australia moves into one of the more difficult times in history, we want to offer our assistance and guidance in reducing the costs for apartment owners. During the GFC we saw people stop non-essential spending. So we know that people will quickly deem body Corporate and Strata levies as non-essential, and stop paying.
Our eight recommendations to reduce the running costs of a building and help people who will struggle to pay their levies over the next 6 to 12 months are:
- Cancel Sinking Fund Levies
To do this, you need to convene an EGM and resolve that the sinking fund levies for the next 6-12 months be changed to zero. With the use of our online voting or conference calling for your meeting, you can vote while not breaching the social distancing recommendations. - Review admin expenses and remove unrequired items ( e.g. window cleaning, painting) until late in the year, defer any required reports or audits and any other non-essential costs.
If you find large amounts of savings, you can also change your administrative levies at that same meeting where you cancel your Sinking Fund Levies. - Defer costs, such as paying your insurance monthly
Cashflow management will be a crucial skill in surviving the next 6-12 months. By taking advantage of monthly insurance payments, as opposed to full upfront payments, you can reduce the total levies you need to pay in the near future. - Get another broker to look for savings.
If your insurance renewal is coming up in the next few months, you should consider a second broker to try and find you some savings. How you do this so not to damage yourself can be tricky, please email if you need assistance. - Remove/waive interest on overdue levies if you have 6-12 months cash in the bank
Some owners will find themselves in a position where they will not be able to pay the levy, charging them an additional 10% (NSW) interest or 30% (QLD) interest will not make them find the money. When you hold your EGM, you should consider waiving interest costs for six months. - Defer debt recovery for a longer period
Much like items 5, if people don’t have the money to pay levies, spending money on lawyers to chase them won’t help, it will only make things worse. Defer debt recovery action on all levies for 6 to 12 months.
It is important to remember that levies are attached to the property, so you will always recover your money, if not straight away, but when the person sells.
- Push people to email docs
Printing and postage is a cost you can rapidly reduce, get everyone you know to email their strata manager and tell them you want to receive all documents via email. This will save $30-60 for each apartment owner each year.
If your Body Corporate or Strata Manager charges you a fixed fee for printing and postage, you should still have people request documents via email and then negotiate a reduction in your fixed postage charge. - Review contracts maturing
The more time-consuming recommendation is to review the contracts that are due to mature and issue them for tender, or negotiate with your current provider, on how you can reduce the costs.