As the cost-of-living crisis continues to bite New Zealand, some focus has fallen on levies and trying to understand if they are increasing, why, and by how much. We are seeing increases to budgets of 5 to 15 percent on average. Increasing insurance costs due to a hardening market, an increase in replacement values, higher building materials and labour costs are most likely to account for the increases.

Delayed or deferred maintenance is problematic as the money must be paid either today or in the future regardless. Inflation continues to be persistent resulting in increased prices for goods and services and this means a job done today will likely cost more if deferred for a few months. Higher maintenance and utility bills mean higher operating costs for shared living communities.

It is interesting to note that the increases we have seen and are experiencing over recent times have not been a deterrent for new owners purchasing a property. It is what it is they say.
Current owners of course have seen increases over time which new owners have not. It seems there is an emergence of younger owners now on committees who should bring a proactive approach to future proofing the financial stability of Bodies Corporate and Residents Associations.

Some clients have managed budget increases by increasing the frequency of their levies, accepting higher insurance excesses (although we would highly recommend that this excess amount be allocated into a contingency fund to reduce risk exposure), reducing their utility readings and resultant levy invoices from monthly to annually, and looking closely at their Long-Term Maintenance Fund contributions.

Owners should be prepared for increased levies or in some instances the need for special levies to raise funds. Unfortunately, we don’t see a return to budget quantums that were raised even one year ago due to these challenges. During the year ahead committee’s will no doubt be looking at their budgets and outgoings to ensure levies are justifiable.