Condo insurance premiums are a hot topic at strata AGMs, and amongst homeowners, real estate professionals, and buyers alike. As a result, it is important to stay informed on how other strata communities across B.C. are managing their annual budgets.
At Eli Report, we are data-obsessed and want to share with you the details of our data findings regarding strata budgets.
Total Annual Budgets: 2020 is all about Insurance
Our data suggests that 93% of strata budgets have risen thus far in 2020, while 3% remain unchanged and 3% have decreased. Insurance premiums have not decreased for any strata corporation in our cohort. In fact, a whopping 97% of insurance premiums were up over last year. Just 3% of stratas had insurance premiums that were unchanged. It is possible they were not up for renewal or made other changes. We will do a deeper dive into insurance premiums in another post, as beyond rising premiums most stratas are being affected by radically higher deductibles.
Examining the Budget Increase
In 2020, our cohort has experienced a 71% average increase in insurance premiums over last year. It is clearly the most significant contributor to the average 12% increase in total budget. Interestingly, average expenditures on Repairs & Maintenance (R&M) and Contingency Reserve Fund (CRF) contributions have also increased.
Change in Relative Expenditures
While in absolute terms expenditures are rising, stratas are spending a lower percentage of their budgets on R&M and CRF contributions, by 2.0% and 1.1% respectively. Where’s the money going? If there was any doubt, the data shows it is going toward those insurance premiums!
Repairs & Maintenance
While rising maintenance fees are placing a burden on owners it is encouraging to see that most stratas realize that cutting corners on R&M is not likely to pay dividends. Nearly ¾ of stratas plan on spending more on maintenance in 2020 with roughly a quarter spending less.
Contingency Reserve Fund Contributions
While 20% of strata corporations cut back their CRF contributions, 40% have increased them and 40% left them unchanged. There is clearly financial pressure on owners this year, which makes things difficult. However cuts to CRF contributions generally increase the risk of future shortfalls and special levies.
If your strata is struggling with higher maintenance fees in 2020 as a result of rising insurance premiums, you are not alone. See how you stack up against other stratas of a similar type and age. Ask your property manager or sign up here for a free Eli Report.
Realtors with active listings or interested clients can register here – your first report is always free.