The financial status of your strata scheme isn’t just about the dollars and cents available for repairs and maintenance. The reality is strata finances can have a huge impact on the overall success of the scheme or building. Firstly, most people do their research before buying into strata. If the finances don’t look good, buying an apartment isn’t very attractive. This is because poor financial management can cause the building’s value to decrease, making it more difficult to sell an apartment later on.
Of course, poor financial control also leads to maintenance being neglected, while improvements and upgrades become completely out of reach. All owners pay strata fees, and they expect that money to be used responsibly. So, here are a few signs of bad financial management to look out for.
Low capital works fund
The capital works fund (or sinking fund) is used for out-of-the-ordinary expenses. It might be unexpected repairs due to storm damage, increased insurance premiums or, most commonly, to upgrade parts of the building. These upgrades benefit everybody. It might be installing solar panels to reduce energy costs, or upgrading the gym facilities.
However, if you’re consistently being told that there isn’t enough money in the capital works fund, it’s an indication the finances aren’t going well (unless there is a very good reason for it).
Maintenance being neglected
There can be many reasons for maintenance being neglected, such as poor building management or the unavailability of contractors. But the most common reason that repairs slip through the cracks is that there’s simply not enough money for them.
The strata fees paid by owners should be enough to cover basic repairs and maintenance on the property, so if things aren’t getting done. It’s time to start asking some questions at the next general meeting.
Empty apartments
When apartments are empty in a strata building, it affects all owners. Essentially, if there are uninhabited apartments, it probably means fewer strata fees coming in each quarter. This naturally reduces the scheme’s capacity to keep up with basic maintenance or even pay the bills. Even if the owners of empty apartments are still paying lot fees, it raises a question as to why they’re unable to sell.
People usually research thoroughly before buying into strata, and they don’t want to buy into a scheme that’s struggling financially. In this way, empty apartments may be an indication that things aren’t going well at the strata management level.
Need help with strata management?
More Than Strata specialises in the complete management of strata schemes. This means taking care of the financials, such as strata fees and expenditures, initiating General Meetings, and being a point of contact for any lot owner concerns. Often, strata committees are made up of volunteers who don’t have the experience required to successfully manage a strata scheme. If this sounds like something you’re struggling with, contact us today and find out how we can help.
