Trustees face challenges as we move to the last quarter of 2023
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As 2023 moves into its final quarter, trustees of bodies corporate and homeowners' associations find themselves in the eye of a perfect storm. South Africa is faced with a confluence of challenges, including a tough economic climate and load shedding.
Leading property management company, WatchProp's managing director, Craig Coetzee, says these factors have created a complex and demanding environment for trustees, who manage the affairs of community schemes. The predicted landscape toward the end of 2023 and into 2024 is unprecedented and trustees need to explore various strategies to ensure their schemes' success.
A tough economic climate
The current economic landscape is marred by challenges, including high unemployment rates, inflationary pressures, and fiscal deficits. These impact community schemes and the ability of trustees to function effectively.
Escalating levies and increased need for Special levies
Trustees are faced with the unenviable task of increasing levies to cover rising costs. Homeowners, however, may be financially strained due to the broader economic downturn, making it challenging to pass levy increases or raise special levies.
Maintenance
Funds have become a limited resource for many schemes. Community schemes may face challenges to maintain and repair common property. Deferred maintenance is not ideal as this can lead to the deterioration of common property, which affects property values and the quality of life for residents.
Arrear levies
Trustees will be required to be more vigilant in collecting arrears from owners who are finding it more difficult to meet their financial obligations. This is a daunting task,, especially when more individuals are facing financial hardship originating from the pandemic followed by loadshedding, unemployment and a downturn in the economy.
Loadshedding
Loadshedding, a recurring phenomenon, adds another layer of complexity for trustees.
- Backup power solutions. Trustees are forced to invest in backup power solutions to ensure the continuance of essential services, such as power at the gates, street lights etc. These installations can strain tight budgets.
- Increased operating costs. Load shedding can result in increased maintenance costs for generators and other backup systems. Trustees must carefully consider these additional expenses while balancing the budget.
- Security. Load shedding continues to create security vulnerabilities. Trustees need to address these concerns to ensure the safety of residents.
Coetzee says trustees need to be proactive and innovative in turbulent times. Faced with enormous challenges, they need to explore innovative solutions to manage community schemes and homeowners' associations.
- Financial planning. Trustees already engage in prudent financial planning, including budgeting for potential levy increases and maintenance projects. During tough economic times, they should also explore cost-saving measures and energy-efficient solutions to mitigate the impact of load shedding.
- Communication. Precise communication with residents is essential. Trustees should inform residents about the financial realities of the scheme and the importance of levy payments made on time.
- Advice. Trustees do not always have experts on their boards and should, therefore, seek guidance from financial advisors and legal experts who specialise in community schemes. Property managers and other professionals can provide valuable insights and help navigate complex legal and financial issues.
- Energy efficient living. Investing in energy-efficient technologies (solar panels and LED lighting) can reduce operating costs in the long term and mitigate the impact of load shedding.
- Engagement. There is no more important time than now to encourage resident participation and engagement in the decision-making process. Involving the entire community unites residents resulting in a better equipped board of trustees to tackle challenges and find innovative solutions.
Coetzee concludes by saying that trustees face a daunting task heading into the latter part of 2023 and into 2024 with no predictions indicating a significant boost to the economy or a solution to loadshedding. With effective communication, financial planning and a united community of residents, challenges can be navigated. Work together as a community, involve your property manager and explore solutions to weather a stormy climate and ensure a better living environment for all residents.
Author: Watchprop