Australia is in the midst of soaring living costs, and apartment owners have encountered a growing concern – the burden of rising contributions to their shared community. In the past year, levies have seen a significant uptick, with increases averaging around 15 to 20 percent. These can be attributed to escalating expenses in various areas, such as insurance, utilities, repairs and maintenance, which are often surpassing the already concerning rise in general inflation.
While inflation has shown a year-on-year increase of 6% to June 2023, certain integral components of a building’s budget have surged beyond this figure. Insurance premiums have seen substantial hikes due to increased replacement values brought about by rising labour and building material costs. Simultaneously, the heightened costs and risks caused by natural disasters locally and globally contribute to the upward trajectory.
Electricity and gas costs, which constitute substantial portions of a budget, have also experienced significant spikes. The cumulative impact of these cost increases on the running costs of a property has, in turn, left individual owners grappling with a financial strain that extends beyond their everyday commitments and expenses.
Despite these financial challenges, there has been a notable reluctance among owners to publicly address these issues, primarily due to concerns about potential impacts on property resale values. This silence persists even in the wake of a 2021 report on defects in New South Wales, which revealed that a staggering 39 percent of residential apartment buildings constructed between 2014 and 2020 exhibited serious defects.
Among the defects identified in the report, waterproofing issues were the most frequent, affecting almost a quarter (23%) of the surveyed buildings, followed closely by fire safety (14%) and structural matters (10%). Ultimately, much of these costs fall in part on the individual owners to make up these rectification costs.
This current climate highlights the need for professional advisory services to navigate these challenges in the form of Strata Managing Agents. Strata Choice has a proven history of providing cost effective solutions such as:
- Utility Cost Management: Keeping costs down and actively running in group-tender exercises to negotiate favourable energy bills for communities. By pooling resources and expertise, owners save money on utilities, ensuring financial relief in an area that significantly impacts levies.
- Effective maintenance is vital, especially in a “hardened” insurance market where insurers are increasing premiums for properties with inadequate maintenance or unrepaired defects. It is important for communities to fulfil their duty to repair and maintain their common property professionally. A proactive approach and getting the right advice to not only address current issues but also implement preventative maintenance to prevent future problems and safeguard an owners investment.
- Accessible information via an Owners Portal is paramount in this day and age. Property records and information should be easily available so that owners can make informed decisions about their community and see how their costs are managed.
- Support when things become difficult: a good Strata Managing Agent recognises that, at times, a payment plan is the best option when things get tough. This flexibility ensures that owners can manage their financial obligations more effectively, reducing personal stress.