This article explores the concept of opportunity cost of delaying strata repairs and advises against delaying essential repairs, despite financial concerns, due to potential additional costs from staging and the burden on residents and committees.
Question: How does the timing of expenditure for essential repairs impact the potential for claiming these deductions by individual owners or the overall financial health of the scheme? What is the potential opportunity cost of delaying strata repairs?
What is the potential opportunity cost of delaying special levy funded essential strata repairs? How does the timing of the expenditure financed by a special levy now compare to the later impact the potential for claiming these deductions by individual owners or the overall financial health of the scheme?
Answer: There is a tendency for committees and owners to consider the expenses, try to go cheap, delay the work or do it in stages.
This is less of a tax issue and more of a practical problem. Generally, there is a tendency for committees and owners to consider the costs first. They worry about the expense, may try to go cheap, delay the work or do it in stages.
In my view, there are some situations where staging is acceptable, but it is rarely a good idea. The issues may not be limited to financial concerns. They are also emotional. Owners don’t want to live in a construction zone for the next five years. It’s tiring, and it’s hard work for the committee. You are better off working out the right project and doing it once rather than staging works over several years.
Staging the project often results in additional costs due to duplication. If you have to put scaffolding up, do everything requiring scaffolding at that one time, even if the painting schedule might not be due for four years. The cost of work on strata buildings seems to increase annually by a lot more than inflation, the CPI, or the labour and materials index (LMI).
Paul Morton
Lannock Strata Finance
E: paul@lannock.com.au
This post appears in the July 2025 edition of The NSW Strata Magazine.
Read next:
- NAT: Strata committee tax responsibilities: Are hidden tax risks threatening owner finances?
- WEBINAR NAT: The cost of procrastination in strata. What is the true price of delay? Paul Morton, Lannock Strata Finance – Feb 2025
- QLD: Q&A Body Corporate Financials, Audits and Tax
- NSW: Q&A Strata Accounting – Software, Tax Returns
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