One of the biggest impacts of the COVID-19 health crisis is the damage that it has caused to the economy. The social distancing and lockdown means that a large number of businesses have had to shut down for months. This translates into a national unemployment rate that is the highest it has been since October of 2010. Whether they are permanent losses of employment or temporary layoffs, this has had a profound impact on those living in condos, whether they are tenants or owners. In this post, we examine some of the aspects of condos that have been directly affected by the economic crisis brought upon by the pandemic.
Many property management companies have revealed that in the past few months, there has been a significant number of condo owners asking for maintenance fee deferrals. It is suspected that the sudden increase in request for deferrals came between the loss jobs to when emergency government aid have been obtained. The good news is that the number of those requests have decreased since the aids have been pouring in.
What the management's position is with respect to request for maintenance fee deferrals is a rather grey area. One thing that is certain is that the situation will either improve or worsen depending on how long the lockdown remains in place.
The lockdown has lead to the loss of jobs. But those that have maintained jobs have largely been working from home. More time spent on homes has brought about more stress and congestion in buildings and also higher consumption and costs for utilities. While some utilities providers have decreased costs, it is safe to assume that the increase in actual consumption may outweigh the decreases provided.
The sudden swift change in consumption and costs has caused significant uncertainty that makes it nearly impossible to revise condo budgets. The only thing that condos can do for the time being, is to monitor the situation and modify things accordingly.
Maintenance Work Backlog and Costs
Another consequence of the lockdown is that much of the maintenance work in condos have been delayed. This has created an unprecedented backlog where the only work that gets completed are those deemed as "urgent" by the vendors. While damaged buildings in and of itself can cause stress, the costs and access to repairs when things do start to open back up may become a serious burden for condos.
One thing that is certain is that when damages are not repaired in a reasonable period of time, there is a greater risk that those damages can become bigger compared to if they were fixed expediently. While this issue in condos is not talked about a lot, it definitely poses one of the more serious risks during the pandemic (other than the obvious health risks).
Another thing to watch out for is when the lockdown eases up, there is a good chance that the pent up demand for maintenance workers may cause a shortage and unavailability to them. The eminent lack of access to repair personnel may have a significant impact on costs for the condos.
Revising the Budget
Given all of the above and other exceptional and unforeseen consequences, it may be required for condos to adjust budgets to the realities of today. Some of the things that need to be accounted for are the deferral or reduction in monthly fees and in some cases, increases in certain types of expenditures. The items that will need to be considered when revising a budget include things such as utilities, sanitization/cleaning, and security.
We at Condo Manager have extensive experience with property managers and condo accounting. We would be more than happy to share our experiences with you. If you have any questions or comments, please feel free to reach out to us.