I do not think many people really know what the Corona virus will bring for the owners of property or body corporates. In this article we will try to share our views.
What will be the primary concern for body corporates? In our view one of the topics that is not getting a lot of attention is the need to do proper credit control on the payment of levies and service fees. Business in general is being negatively affected bij the corona outbreak and if we look at other countries in the world quite a few people may be laid off or put on short time. Commission based workers could be the biggest sufferers, income will be reduced, and they will battle to pay their levies.
With this in mind it is especially important that managing agents and trustees understand the difference between “cannot” pay and “don’t” want to pay. Body Corporates, who have had good collections, good credit control and good budgeting should have nothing to worry about and should be able to weather the storm easily. The difficult times are likely to last between four and six months, after which, hopefully, things will start to return to normal.
If the infection rate goes high the number of people who pass on could be about 2% of the total infection rate, but as many sectional title schemes have older aged owners and occupants, especially in retirement villages, this may cause a longer problem as estates will need to be finalized.
A similar situation could arise with tenants. For example, students have all be sent home for an extended Easter holiday and the problem is to make them understand that their rental is still payable. Overall, tenants will tend to be younger than the owners and therefore less likely to succumb the effects of the virus. While more of them will be of working age (and more affected by the business downturn).
Knowledge is king
It is important to KNOW that the owner or tenant has ACTUALLY had a loss of income due to the virus and is just not trying to avoid paying their levy or rental. One solution is to have them sign an acknowledgment of debt and give up to a maximum of three month levy/rental leeway. There is also be big difference between paying nothing at all or just being able to pay your levy and rent in full.