High inflation, the global Covid-19 pandemic, Russia’s invasion of Ukraine and the numerous natural disasters right here in Australia have all played a role in the rising cost of living for every day Australian’s. Most notably impacted in the building and construction industry, which is facing supply shortages of building materials and labor. As you’ve likely read in the news, this is impacting the countless Australians building new homes and renovating their existing homes. What hasn’t however been reported, is how inflationary pressures are impacting strata-titled properties requiring regular maintenance works. How is high inflation impacting Strata Companies?
Limited construction workforce
With the limited workforce to undertake construction and maintenance works, Strata Companies are put in difficult positions. There is a high demand for construction works for both strata-titled properties and freehold properties, resulting in long wait times.
Short supplies of materials
Timber, steel, windows, doors, roof tiles, bricks, waterproof insulation and electric equipment are just a few of the materials that are difficult to acquire due to high inflation. These materials are essential for many maintenance works your strata lot may require.
Increased costs for maintenance works
We are currently seeing issues with materials and labor shortages leading to an increase in costs for Strata Companies. This can have a serious impact on your Strata Company’s budget, causing levy contributions to increase and preventing some from ensuring their strata lot is well-maintained.
What can we do to prepare for issues of high inflation?
Review your maintenance plan and reserve fund
The primary purpose for capital works, maintenance, and reserve funds are to repair and replace the shared or common property of your strata scheme.
By its very nature, these costs are usually centred around construction materials and labour, which that have experienced an extraordinary rise in prices (that’s anticipated to continue for the foreseeable future) so it’s important to refer back to your 10-year plan and review maintenance plans, maintenance budgets and your reserve fund to ensure they are structured to accommodate these increased prices without jeopardising the amenity of the building or safety of residents.
Minimise quote numbers for maintenance works
During periods of low inflation, you have the luxury of requesting as many quotes as you like for maintenance works. However with extensive wait periods, we recommend choosing 2-3 contractors you trust to provide you with quotes for the work so you can pick a contractor promptly and the work can be completed as soon as possible.
Find reliable and trustworthy contractors
It is always wise to build long-lasting relationships with contractors so you can return to them regularly, knowing they will do a great job and act with integrity whenever they work for your Strata Company. It is more important than ever to know reliable contractors in the current climate. When you trust the contractors you hire, the process to fix issues in the strata lot is smooth and simple, leading to long-term property value well in the future.
Prioritise essential works
When you are considering what maintenance works are needed, prioritise those that need immediate attention first. Any urgent works can be tended to promptly and non-urgent works can be delayed to a later date to ensure no lasting damage is done to the property.
Want to know more about how you can prepare for high inflation issues? Give us a call on 08 9362 1166 or email us at info@esmstrata.com.au. You can also learn more about strata by visiting the News and Resources page on our website.
