This article about budget plans and levy resets has been supplied by QIA Group.
Feedback from many Strata Managers around Australia indicates that financial stress is continuing to build for many Owners and may lead to significant levy stress in the last quarter of 2020 and the first quarter of 2021
Reasons for this increased financial stress include:
- Coronavirus Supplement reducing
- JobKeeper payments reducing
- Businesses closing and unemployment rising
- Mortgage Freeze ending
- End of year expenses
Are You Prepared to Weather the Storm?
Before you consider deferring or reducing levies, it’s critical to review your existing Capital Works Fund Plan, Maintenance Plan or Sinking Fund Plan to ensure that essential maintenance can still be funded and occur as scheduled, otherwise there could be serious ramifications such as maintenance issues, building degradation, special levies or additional costs.
It’s also important to avoid “kicking the can down the road” by suspending levies or maintenance now, only to reinstate it later, as this simply pushes the problem into the future. Instead, a review of your current plan and an assessment of your property’s current financial position is required to be able to revise your plan to ensure that maintenance can occur as scheduled, that Owners can receive levy relief, and to avoid special levies or sudden increases to future levies.
Review & Refine
Services such as a “Levy Reset” are a low-cost way to review your existing Capital Works Fund Plan, Maintenance Plan or Sinking Fund Plan with the aim of ensuring that forecast capital works can be funded over the long-term while looking for ways to reduce levies as much as practically and responsibly possible in the short-term. The goal is not to remove or delay any capital projects but rather to revise the timeframe in which they are funded.
Likewise, tools such as the “Online Budget Planner” are a game-changer for the Strata industry. It’s a powerful online tool that allows authorised Owners and Managers to update and refine their Capital Works Fund Plan, Maintenance Plan or Sinking Fund Plan, and see in real time, what effect any changes would have on their levies. This is particularly useful during these uncertain times as Committees may need to respond to sudden or significant changes to their budgets.
This post appears in Strata News #414.
Have a question about budget plans and levy resets or something to add to the article? Leave a comment below.
- NSW: Levy Recovery Practices to Change Due to Coronavirus
- QLD: Q&A Freezing Levy Payments to Protest Bad Service
- VIC: Q&A Can I get a Refund on My Special Levy Please?
Looking for strata information concerning your state? For state-specific strata information, take a look here.