Purchasing Power and Consumer Spending

Inflation erodes the purchasing power of money, leading to a decrease in real wages and disposable income. As prices rise, consumers find their money buys fewer goods and services, forcing them to cut back on discretionary spending. This reduction in consumer spending can have a ripple effect across the economy, leading to lower demand for goods and services, reduced business revenues, and potential job losses.

This will have a cost of living impact for residents in blocks of flats, influencing their ability to pay rent and service charges. As household budgets come under pressure, residents may prioritise essential expenses over discretionary spending, leading to potential arrears in service charge payments.

You may not specifically adjust your budget in relation to this. After all, if a building needs maintenance, then you have to budget accordingly. However, you should be mindful, in a cost of living crisis, that if you budget for too much there is a very real likelihood that no one will be able to pay. Don’t shock leaseholders, involve them in conversations earlier, get their input, prime them early with how much they will have to spend.