How to reduce levies in this Covid 19 World ? or indeed should levies be reduced at all ?
We are starting to see job losses impacting on the ability of both owner occupiers and landlords to pay their levies – owner occupiers who have lost their jobs and landlords whose cash flow from tenants they cannot evict dry up.
The core question for Committees is …..Should any levy relief be universal for all owners or selective for only those demonstrating financial hardship ?
If universal relief is required, then schemes need only to call an EGM to rescind past levy resolutions and resolve upon a new levy structure.
Only an ordinary resolution is required (same as when levies were originally resolved ) but the greater challenge might be how to hold an EGM with appropriate social distancing.
If the OC has already resolved to hold electronic meetings, then this is straightforward, but if it has never passed this resolution then it needs an “in person” EGM to resolve to permit electronic general meetings ! ( Chicken and egg situation…. but fortunately there is a neat work around for this involving the SM holding proxies and being the only attendee in person at an EGM ! )
So back to the issue of reducing levies….Reduce them for all owners or just recognise the financial hardship of certain struggling owners – the latter avoids giving relief to your scheme’s “serial recalcitrants”.
Recognising straightened financial circumstances can be as simple as the Strata Committee resolving not to proceed with recovery (for now at least) on a case by case basis and need not involve formal payment plans. There is no obligation on a Strata Committee in NSW to collect unpaid levies; likewise there is the discretion to waive statutory interest ( some would hold that the waiver of interest can only agreed by owners in general meeting, but that still allows interest waiver to be used as a tool for financial relief ).
Whether it is a general levy reduction or recognition of individual financial hardship, a scheme’s cash flow will be impacted and, as Jimmy notes above, it may mean dipping into the Capital Works (Sinking) Fund pot. Just remember to fix up the Capital Works Fund Plan so that it aligns with the new levy realities
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