QLD: Money talks

This article is about the benefits of body corporate budgeting for QLD lot owners after the new strata QLD legislation changes.

If owners are worried about the costs of running their scheme, proactive engagement can help them understand the finances and what they can do about them.

We all have money worries, so it is no great surprise to find that just under half of the respondents to Tower’s survey of owners listed rising costs as the primary concern in the running of their building.

Body corporate budgeting can be a fraught business as it has to combine legislative and compliance requirements while getting collective approval from owners who each have their individual needs.

Still, committees and managers spend considerable time reviewing budgets to avoid unnecessary expense. Levies may increase from time to time, but that does not mean the expenditure is a waste as the money spent should come back to the scheme in improved environmental or service standards.

If you have concerns about the finances at your scheme, here’s a few ideas that can help you take the next step to ease the problem:

Be informed about body corporate budgeting:

Most people will look at their personal bank accounts reasonably often, but when was the last time you had a real look at your body corporate accounts?

Tower customers all have access to financial information about their scheme that is updated daily via the online portal. Check that and mail your manager if you have any follow up questions – they are happy to help.

Many owners don’t understand the value of their levies because they don’t see where the money is going. You may not agree with every line item, but budgets are carefully considered and shouldn’t have too much fat. Remember that expenses are spread across all owners. The total cost for a line item may sound high, but divide it by the number of owners to see how much it costs you as an individual to put it in context.

If committee members are finding owners are having problems with the budget, they may want to send out a communication to explain how the building is running. Expenditure decisions usually involve real-time and investment on the part of committees to evaluate the options – it doesn’t hurt to remind owners of this now and again.

Make careful cuts:

Budgets and expenditure aren’t fixed in stone. Most body corporates will have some areas of expenditure that can be removed or trimmed. When checking the budget, ask if the services you have are providing value for money. If not, then ask if a service can be stopped or have its frequency adjusted.

Periodically review your contracts – many long-term contracts include year on year price rises that see them rise over the market level. Contractors may be willing to bring their costs down when this occurs. If a contract is due to expire in twelve months, start negotiations early – many contractors would prefer to make an adjustment now than have you test the waters later.

Focus on value:

Too often, the conversation in body corporates revolves around getting costs down to a minimum. That’s OK if that’s your priority, but minimum costs usually come with minimum standards, and they can quickly get reflected across the property. All owners benefit from sound investment in their scheme, whether it through creating a better environment, higher rents and ultimately higher sales value. The best-run schemes understand that the money they put into the property today comes back over time. When considering expenses, the question should never be how much does it cost, but how much value does it provide?

William Marquand Tower Body Corporate E: willmarquand@towerbodycorporate.com.au P: 07 5609 4924

This post appears in Strata News #489.

Have a question about body corporate budgeting QLD or something to add to the article? Leave a comment below.

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This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.

Read next:

• QLD: Changing the Body Corporate’s Financial Year
• QLD: Is Your Body Corporate Overcharging?
• NAT: Budget Plan Levy Reset Case Study

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