Planning for the Worst

One fundamental principle of long-term financial planning is to anticipate and prepare for potential risks and challenges. Property managers should adopt a conservative approach to budgeting, ensuring that the service charge budget plans for the worst-case scenarios. It’s better to collect more than necessary than to find yourself short of funds when unexpected expenses arise. By building reserves and contingency provisions into the budget, property managers can mitigate the impact of unforeseen events and maintain financial resilience.

This is of course incredibly difficult to explain to leaseholders who, understandably, do not want to pay more than they have to on their service charges. However, it is the duty of the property manager to ensure they are putting forward the correct budget to keep the building in the best possible state of repair and safety. Communication is key here, getting leaseholders to understand your rationale, long-term plans and how the lease deals with over collection of funds is paramount