As we all face 2018 and residential apartment prices continue to grow in Sydney and New South Wales we have outlined the top must do’s for every strata committee in 2018.
Every item below is a mini insurance policy for your buildings future and current value.
1.Facade Cladding
The Grenfell fire in London made the combustible cladding front page news around the world. Understanding what your building is made of has never been more important.
Action Item: look at your building, if you have anything in your building looks like these photos below investigate what it is, because not all cladding is the same.
Putting your head in the sand on the facade cladding won’t work insurers are charging strata apartment blocks with a large premium increase if they are unable to accurately identify the risk of any facade cladding on the building.
2. Capital Work Fund
Having an accurate capital works fund or sinking fund is the difference between buildings that need special levies on short notice and buildings that keep themselves maintained while never asking for more money for the owners.
Action Item: Read your current report and either accept it or get a new one.
Remember that apartment purchasers are getting smarter and smarter, they understand that low levies and a low capital works fund balance often means special levies can come at any stage and they will calculate this into the purchase price.
3. Swipe Card Audit
People regularly change the front door lock then they move into a new house but do you ever think who has access into your strata building that shouldn’t.
Action Item: Audit all access devices, swipe cards and remotes, into your building.
Each building’s system is different so how you can complete your audit will vary, speak to your building manager or locksmith/swipe card provider for assistance on your audit.
4. Read Your Financial
With apartment prices regularly over $500,000, making the smallest of apartment blocks a multi-million dollar asset. Reviewing your financial position is critical. I encourage all strata committee members to read through the current financial statements and understand the position you are truly in.
Action Item: Read the financial states and find the answers to these questions
- Are any levies outstanding? How much? If they are 60 days overdue, what’s being done to collect them?
- Cash at Bank in admin and capital fund?
- Is admin or capital fund in deficit?
- Do annual admin levies cover annual expenses?
When reviewing your financials think of it like your own, you’re in a bad position if lots of friends owe you money and if you’re spending more money than you’re earning you’re in even more trouble.
5. Inspect your building
Most people find themselves with a special levy or damage building simply because they haven’t spent 10 minutes walking around the building to understand the condition it’s in and what they would like to change about it.
Action Item: Walk around your building with a smart phone and take photos of anything that you want to be upgraded, replaced or repaired.
You can use this information to create your action list and send instructions to your maintenance manager, this will also create a better understanding of your current financial position and potential liabilities approaching in the next few years.
6. Implement standard procedures
Plan for the future with simple standard operating procedures for your building. With all members being volunteers it’s best to outline the rules boundaries and information needed when owners applications are received before they are received.
Action Item: Adopt application forms for your build, pets, renovation and insurance claims. Watch www.purelyapartments.com where we will be sharing our recommended procedures.
7. Insurance Replacement Value
We all expect that our property is insured for the right amount, but have you ever checked or got a second opinion? Personally, I purchased in a building that was 30% underinsured, the strata company got a replacement valuation every year, but it was from the same company and no one ever questioned it.
Action Item: Find out how much your building is insured for? Next time you get a valuation, have a different company provide the report and make sure they come onsite.
Every building is different so its hard to give a guide on what’s right, but you need to expect something like $400,000 per apartment as a rough guide. But best to get an expert to calculate it for you.
