Body Corporate Budgets
31st August 2020
By Office of Commissioner for Body Corporate Qld
The financial operation of a Body Corporate is like running a business, and like most businesses, proper budgeting is the key to financial health. Just like businesses, a Body Corporate has two separate yet vitally important budgets. The first budget is the day-to-day budget, also known as the administration fund, which encompasses, exactly as described, the everyday operating costs and expenditures such as administration and secretarial costs, power, water, insurance, and maintenance items (lawn, garden, and pool, etc.) . The second budget is the long-term budget, known as the Sinking Fund budget. This budget is more flexible and is devoted to the body corporate’s long-term financial requirements, such as improving the buildings’ condition, major projects like redecorating or major improvements, or elevator upgrade.
The arithmetic is simple. Your scheme (strata community) costs a certain amount to run, maintain, and repair. The more facilities and services your building enjoys, the higher your levies are likely to be. There is no escape from that – you get what you pay for and you pay for what you get.
The other end of this issue is when the levies are kept artificially low, usually by cutting services and neglecting maintenance.
And while no one wants to pay a cent more than they have to, when your committee members start cutting corners (to save themselves money and ensure they get elected every year), it's your investment they are damaging.
Save for a Rainy Day
In addition to projecting the everyday expenses of the budget, certain monies should be set aside for emergency costs. Sometimes this is too is hard to predict, but again, budget teams can learn from the past. For example, if a property is in a flood zone, try to quantify and project the cost of flood damage from previous flood events, etc.
Important links -
For more information download this document