Planning for the Unforeseen

While the CAPEX plan provides a framework for planned expenditure, reserves and contingencies are also crucial for addressing unforeseen events and emergencies. Property managers must anticipate potential risks and budget accordingly to mitigate their impact. Establishing reserves and contingencies allows property managers to respond promptly to unexpected expenses, such as emergency repairs, legal disputes, or health and safety issues, without jeopardising the financial stability of the property.

Following the Grenfell Tower tragedy there has been a huge amount or money spent in making certain blocks of flats safe. This caught out a huge number of buildings with inadequate reserves and left leaseholders sitting with bills of hundreds of thousands. While this is an extreme example, ensuring you have healthy cash levels in reserve to cover or take the brunt of unforeseen items is incredibly prudent property management.