Strata schemes are being offered what could be, if they choose, “free money” to fill the holes in their budgets created by owners defaulting on their levies.
And assistance is also being offered to unit blocks that have taken a financial hit in the recent floods, especially when their expenses have not been immediately covered by insurance.
In regard to levies shortfalls, specialist strata loan company (and Flat Chat sponsor) Lannock is offering finance that will (currently, at least) be more than covered by the mandatory penalty rates that are set out in strata laws in many states, including NSW and Victoria.
That not only takes the pressure off strata schemes, it has a knock-on effect of giving more time to owners who have fallen into financial difficulties during the pandemic but are battling their way out.
Right now, some owners’ corporations are facing a shortfall in levies income which their cash reserves can’t cover.
If they are unable to agree on payment plans with owners, they are faced with either pursuing owners through debt collection agencies, increasing levies for owners who can pay, or raising special levies to cover lack of funds … just to cover their running costs.
However, not only does debt collection represent a considerably increased expense for the owners who owe money, it can lead to bankruptcy and, worst case, the forced sale of properties the owners would rather hold on to.
As an alternative, a strata loan would provide the cashflow for the building and take the pressure off everyone, including the block’s casual employees such as cleaners, security, maintenance, concierge and management staff, who might otherwise be laid off to save money.
Larger blocks might be able to withstand levies shortfalls for a while. They may even waive penalty interest on late levies (something that requires approval at a general meeting) if the financial impost on the other owners isn’t too great.
But smaller blocks, many of which run on very tight margins, could possibly use a little help – especially when it needn’t cost paid-up owners a cent. They can organise a loan and statutory interest on unpaid levies will more than cover it.
By the way, this is not the thrust of Lannock’s pitch. They would rather owners didn’t have to pay penalty interest on their levies.
This is just us here at Flat Chat joining the dots for strata schemes that are suffering levies shortfalls and have no wriggle room.
This issue came to the fore this week when Lannock issued a press release reminding strata owners that they are able to help owners corporations who are experiencing problems, especially after recent floods.
“If your OC is experiencing financial hardship, we have specialised loans and a dedicated team that can assist and will process any request within 48 hours,” it said.
“We will get in touch within 48 hours to discuss the options relevant to your particular situation.”
“If your OC is experiencing an increase in arrears in levy payments, our Levy Assist is just right – it’s short-term working capital finance for your OC.
“Levy Assist can be used by any strata corporation in Australia (sorry, not Tasmania yet) which is experiencing arrears in levies or is concerned that that some owners may have difficulty in paying their levies in the future.
“There are no set-up costs -it just sits there as a safety net should you need to use it.
“We also have a simple insurance premium funding solution to assist corporations pay their annual insurance premiums. Unlike other insurance funding, Lannock will NEVER cancel your insurance.”
You can find out more about this various schemes by clicking HERE.
Lannock is a long-time sponsor of Flat Chat and has recently been appointed by the NSW State Government to manage the Project Remediate interest-free loans scheme.
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