Category: Virus

Covid-19 – Strata Budgets

Strata Corporations are self-funded entities and at this time there is no government relief funding available for them to assist in the management and cashflow of their funds. 

A Strata Corporations has a statutory duty to repair and maintain its common property in a good and structurally sound condition, which includes cleaning of common areas, maintain adequate insurance policy and provision of essential services (i.e. lifts, security, electricity, gas, and water).  

To ensure a Strata Corporations is able to meet its financial obligations, Owners are still required to pay their levied contributions, as approved at a General Meeting. 

In some instances, the Strata Corporations can review ways to reduce their expenditure during these times of uncertainty and to assist cashflow requirements. 

It is suggested that any non-urgent sinking/capital works should be placed on hold and consideration be given to temporarily cutting the sinking/capital works levy if owners require levy relief (further noting that this will not be possible unless a scheme has adequate savings, and if any works are able to be placed on hold). We recommend that the Strata Corporations undertakes a revision of their Capital Works Fund Plan, to defer all non-essential works for another 2-3-year period. This will provide for an opportunity to catch up, as well as maintain their legal requirements under the Act. 

Generally review your contracts, as sometimes a contract is on a rollover, and if the service is non-essential, it may be able to be suspended or services limited if possible. 

A breakdown of services considered essential and non-essential for a Strata Corporations is noted as follows (note: other services may be available to the building). 

Item Notes Action 
Strata Management base fee Contractual cost – no saving to be made, noting that we have an increased workload relating to COVID-19, additional costs incurred which are not recoverable and pressure on parts of our revenue  n/a
Strata – Additional Services These are costs that are effectively optional for an owners corporation/body corporate Committee consider undertaking the work themselves (e.g. running committee meetings themselves, preparing agendas/minutes) Lesser costs for meeting Put off non-urgent works 
Taxation Statutory Requirement – unchanged n/a 
Legal Costs Unless a legal matter is ongoing, these may be able to be delayed (e.g. tribunal action for a breach of by-law) Note that defect statutory timeframes still need to be complied with Consider whether matter important enough (or possible) to pursue legally and whether there is a requirement/obligation to do so 
Disbursements Must be incurred when owner has only provided a mailing address in relation to levies/statutory notices (e.g. agendas/minutes), as well as operating costs under the Agreement Owners/agents should provide email addresses to reduce disbursement costs and otherwise discuss with their manager how these costs might be reduced  
Software n/a contractual cost n/a 
Insurance Required As always, broker should be working to ensure owners get the best deal. Payment installment or premium funding may be options. 
Building Management Contractual cost Building Managers are now busier as a result of COVID-19 and are considered an essential service provider. Services delivery may be delivered by alternative means to ensure social distancing. Critical to scheme and resident management. 
Security/Concierge Generally contractual in nature This should be reviewed case by case. 
Cleaning Essential service – may increase due to extra cleaning required Cleaners are now busier as a result of COVID-19 
Gardening/Landscaping Possible to reduce cost but ensuring that gardening/landscaping doesn’t get out of hand Residents could consider undertaking the work themselves, but ensure you notify the insurer of the type of work being undertaken, in order to maintain liability coverage under Voluntary Workers Policy 
Fire Maintenance Essential service n/a 
Fire Monitoring Essential service n/a 
Fire Repairs Essential service n/a 
Lift Maintenance Essential service n/a 
Lift Telephone(s) Essential service n/a 
Air-Conditioning Essential service n/a 
Pumps/Irrigation/On-site detention Essential service  n/a  
Access Control System Essential service n/a 
CCTV Essential service n/a 
Electrical Essential service n/a 
Exhaust/Ventilation Essential service n/a 
Garage Doors Essential service n/a 
Garbage Compactor Essential service n/a 
Gym Equipment Gym should be closed Costs to maintain equipment/utilities in relation to gym offset 
Hot Water Equipment Essential service n/a 
Locks/Keys Essential service n/a 
Pest/Vermin Control Possible to reduce costs by decreasing the amount of sprays completed; not applicable to termite sprays due to warranty review 
Pool (Servicing/Chemicals) Pool should be closed Nb – Councils still require compliance and chemical/maintenance costs cannot be fully eliminated.  Costs to maintain equipment / utilities (heating/lighting) / chemicals in relation to pool offset  
Plumbing and Drainage Essential service n/a 
Window/Facade Cleaning Able to reduce cost Reduce the amount of window/facade cleaning visits NB – if cleaning is required under warranty, ensure that it occurs as normal 
Electricity Essential service n/a 
Water Essential service n/a 
Gas Essential service n/a 
Rubbish Removal Essential service n/a 
Carpet Cleaning Possible to reduce costs by decreasing number of cleans Review needs 
General Repairs & Maintenance that could pose OH&S (i.e. broken tiles) Essential service n/a 
Roof/Gutter Repairs & Maintenance Essential service n/a 
Telephone Expenses (i.e. lift/fire) Essential service n/a 

Covid 19 – Strata and Building Management Perspective

We have now entered an unprecedented period for the 21st century with the onset of Covid 19 virus and the measures which need to be taken to control the spread of it.

Businesses across Australia and the world are all affected in one way or another – there’s very few that will be able to thrive in the circumstances due to the effect on our workplaces, clients, and staff.

The response in Australia is increasingly drastic and we need to adequately prepare for a difficult period over the next few months as services and facilities are shutdown or become increasingly stressed. We are blessed with one of the worlds leading health systems, however, we need to act with caution and be ready to give our support to the most vulnerable within our society.

Bright & Duggan and Cambridge Management Services have introduced a policy of having all frontline strata management staff work from home and ceasing face to face meetings – I applaud our Executive Management Team in reaching this decision as quickly as it did. The update is available on the front page of our website – https://www.bright-duggan.com.au/ . We have different policies for Building managers and other staff within the business – these are being continually updated.

Strata and building management business are very much affected by the fact that we have workforces that have a lot of external meetings, have a number of visitors to our offices, that we provide a variety of onsite services at buildings and have large numbers of office-bound administration staff. That said, we are able to offer a great number of our services remotely.

Some strata and facility businesses have the ability to enable their workforces to work from home (which wholly depends on the staff member having the technology to do so); it’s very difficult to offer building management services offsite when the contract requires onsite services.

We manage people’s homes (and in some cases workplaces, where we manage commercial schemes) and thus have very serious obligations to the occupants to show leadership during this time and do whatever we can to assist authorities in mitigating risks.

What should we all do as soon as possible:

  • Give staff the ability to work from home where possible and ensure that we are aware of the workplace that staff are working from – employers still have work health safety obligations where their staff work from home;
  • Support your staff with whatever circumstances are put on them (sickness, schools/childcare services ceasing for a period);
  • Cease face to face meetings and adopt alternate means of meetings provided for under legislation – this may include meeting via proxies, phone/video conferencing, online or paper voting papers, etc;
  • Take practical steps at your buildings to reduce the risk of infection – additional cleaning, signage, etc.

Some of the potential issues we need to overcome

  • Continuing compliance with strata legislation which can become difficult without being able to conduct certain meetings, arrange onsite inspections, etc;
  • Annual inspections – particularly annual fire safety statements;
  • Defect timelines and the potential inability to do defect inspections/commence proceedings;
  • Contractor attendance – what happens if electricians, plumbers, etc won’t attend site?;
  • Waste management (we presume that council and private collections will continue as normal – if they didn’t it would be bedlam) – we may have to deal with much-increased levels of waste in the event that buildings have all occupants at home for long periods;
  • Residents needing help and assistance throughout any period of enforced isolation;
  • Conflicting and complex legal obligations;
  • Owners/occupants coming under financial stress – non-payment of levies; and
  • Continuing to facilitate strata searches, collection of keys, etc.

One of the great opportunities we have here is to change the way we operate our businesses (with a move to electronic meetings) and provide help and support to people that need it most.

It’s not business as usual but we need to make sure this is the best business we can do.