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Expenses rose 133% in the year and delinquency in buildings is increasing: the best alternatives to reduce costs - Infobae
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www.infobae.com
October 15, 2024
What are the reasons behind the sharp increases affecting both landlords and tenants? In October, the average bill for expenses reached a new record. What is expected for the last quarter of the year?
By Jose Luis Cieri
It is increasingly necessary to do more calculations to optimize a consortium's budget. Expenses continue to rise month by month (Illustrative Image Infobae)
The sustained increase in public services is having a direct impact on the value of expenses, which so far this year have already accumulated an increase well above the average inflation. This tariff adjustment, which in the ninth month of the year reached 18%, occurs in a context of corrections that seek to compensate for years of repressed inflation, which increased the weight of public services in the expenses of the consortia. Thus, in September, average expenses for households reached $155,613, which represents an increase of 6.95% compared to the previous month.
The analysis by Octopus PropTech, which covers more than 120,000 households, revealed that the cumulative increase in expenses during 2024 has already reached 133.57%, a record. In turn, the CPI published by Indec showed, as of September, an accumulated inflation of 101.6 percent.
This increase is due, in part, to adjustments in the rates of public services such as Aysa, Metrogas, Edenor and Edesur, which have experienced monthly increases since May.
Nicolás Baccigalupo , CEO and founder of Octopus PropTech, explained to Infobae that the increase in the public services sector responds to the need to adjust rates that were lagging behind. “This phenomenon is not exclusive to 2024, but what is distinctive about this year is the intensity with which rates were adjusted.”
This tariff adjustment generated significant pressure on the consortia, which also face other significant increases, such as labor costs for building managers.
"There are still scheduled increases that will impact expenses from October to December. The weight of the public services sector could stabilize at around 20% of the total expenses of the consortia," anticipated Baccigalupo.
David Loisi , president of the Horizontal Property Consortium League Foundation, said that “labor expenses are the main factor behind the increases, since salaries and social security contributions grew more than inflation due to the collective bargaining agreements of the foremen's union, many of which were retroactive. It is key that the administrations function as a domestic economy, taking care of the building heritage and fulfilling labor and service obligations with transparency and efficiency.”
Rising utility prices and wage cuts are making paying utility bills an unsustainable challenge for many landlords and tenants.
Failure to comply with this obligation may result in serious legal consequences, such as foreclosure proceedings, seizures, and even loss of property.
Juan Martín Luciani Otaño , a lawyer from the University of Buenos Aires and a specialist in Horizontal Property, warned that this increase directly affects the economy of families and complicates the management of buildings. “When expenses are not paid, the administration has difficulties in maintaining essential services and carrying out repairs, which negatively affects the quality of life of all residents.”
The elimination of subsidies for electricity, water and gas affected owners and tenants, increasing the number of late payments and complicating condominium management. Although they are not the largest expense, these services indirectly impact the ability to pay.
“Staff salaries, especially for supervisors, are the main factor in the increase in expenses. In addition to the basic salary, consortia must cover seniority and other additional costs, which further increases costs, especially in buildings with long-standing employees,” added Loisi.
In several buildings, the hours of the caretaker were reduced and, in many cases, the decision was made to hire cleaning staff to reduce common expenses (Illustrative Image Infobae)
These increases have led to the postponement of maintenance works such as painting facades or replacing elevators. This lack of attention puts the preservation of the building at risk and can affect the safety and value of the properties in the long term.
Rodrigo Martínez Daveño , a lawyer and consortium administrator, warned about the dangers of continuing to postpone works due to high costs. “If this situation continues for too long, the deterioration of the CABA building stock will be critical. It is advisable that consortiums find a balance between covering immediate costs and not neglecting maintenance that guarantees safety and functionality in the long term.”
According to Martínez Daveño, one of the most immediate solutions “is to reduce electricity and gas consumption, turning off the lights in common areas when they are not needed or limiting the use of boilers.”
However, in the medium and long term, more structural actions are proposed, such as eliminating overtime hours for the manager and reducing his working hours.
Martínez Daveño suggested financing maintenance work, such as painting facades or cleaning tanks, by paying for them in installments to ease the financial burden. “These strategies reduce expenses and ensure the maintenance of the building without compromising the well-being of the neighbors.”
To reduce costs, several consortia have eliminated overtime, rented out the doorman's office or terrace, hired cleaning companies to avoid compensation and suspended services such as boilers. In addition, the owners of the house should not receive payments for the use of electricity, water or gas.
High default rates seriously affect the functioning of consortia. When a group of owners and tenants do not pay, the cost is shared among those who do comply, increasing their expenses.
In several buildings, it is difficult to carry out preventive maintenance or painting of facades due to the increase in late payments, which complicates the financial equation of the consortium.
“The default rate, which had already reached 35% last year in some cases, has remained at similar levels over the past two months, creating a vicious circle where fewer and fewer people can cover the costs,” Loisi said.
Luciani Otaño explained that the most common solution is to offer a payment plan, although it does not solve everything, since the owner continues to pay the monthly expense plus the fee. However, these agreements do not include interest or adjustments, which lightens the burden.
Another option is to make partial payments, demonstrating the willingness to comply. “Neighbors can request legal assistance or challenge the expenses at the assembly, highlighting the importance of open communication to fulfill commitments,” concluded Luciani Otaño.
www.buysllba.com
Source:
Las expensas subieron 133% en el año y crece la morosidad en los edificios: las mejores alternativas para reducir costos
Cuáles son las razones detrás de los fuertes incrementos que afectan tanto a propietarios como a inquilinos. En octubre, el pago promedio de expensas alcanzó un nuevo récord. Qué se espera para el último trimestre del año
www.infobae.com
October 15, 2024
What are the reasons behind the sharp increases affecting both landlords and tenants? In October, the average bill for expenses reached a new record. What is expected for the last quarter of the year?
By Jose Luis Cieri
It is increasingly necessary to do more calculations to optimize a consortium's budget. Expenses continue to rise month by month (Illustrative Image Infobae)
The sustained increase in public services is having a direct impact on the value of expenses, which so far this year have already accumulated an increase well above the average inflation. This tariff adjustment, which in the ninth month of the year reached 18%, occurs in a context of corrections that seek to compensate for years of repressed inflation, which increased the weight of public services in the expenses of the consortia. Thus, in September, average expenses for households reached $155,613, which represents an increase of 6.95% compared to the previous month.
The analysis by Octopus PropTech, which covers more than 120,000 households, revealed that the cumulative increase in expenses during 2024 has already reached 133.57%, a record. In turn, the CPI published by Indec showed, as of September, an accumulated inflation of 101.6 percent.
This increase is due, in part, to adjustments in the rates of public services such as Aysa, Metrogas, Edenor and Edesur, which have experienced monthly increases since May.
Nicolás Baccigalupo , CEO and founder of Octopus PropTech, explained to Infobae that the increase in the public services sector responds to the need to adjust rates that were lagging behind. “This phenomenon is not exclusive to 2024, but what is distinctive about this year is the intensity with which rates were adjusted.”
This tariff adjustment generated significant pressure on the consortia, which also face other significant increases, such as labor costs for building managers.
"There are still scheduled increases that will impact expenses from October to December. The weight of the public services sector could stabilize at around 20% of the total expenses of the consortia," anticipated Baccigalupo.
Increases that do not stop
In recent months, some administrations have justified increases in expenses with macroeconomic data. However, recently there has been a slowdown in these increases, and in some cases, even a slight decrease compared to the previous month.David Loisi , president of the Horizontal Property Consortium League Foundation, said that “labor expenses are the main factor behind the increases, since salaries and social security contributions grew more than inflation due to the collective bargaining agreements of the foremen's union, many of which were retroactive. It is key that the administrations function as a domestic economy, taking care of the building heritage and fulfilling labor and service obligations with transparency and efficiency.”
Rising utility prices and wage cuts are making paying utility bills an unsustainable challenge for many landlords and tenants.
Failure to comply with this obligation may result in serious legal consequences, such as foreclosure proceedings, seizures, and even loss of property.
Increase in delinquency
Currently, the default rate on expenses is on average 35%, and in some consortia it reaches 40%, which further aggravates the situation.Juan Martín Luciani Otaño , a lawyer from the University of Buenos Aires and a specialist in Horizontal Property, warned that this increase directly affects the economy of families and complicates the management of buildings. “When expenses are not paid, the administration has difficulties in maintaining essential services and carrying out repairs, which negatively affects the quality of life of all residents.”
The elimination of subsidies for electricity, water and gas affected owners and tenants, increasing the number of late payments and complicating condominium management. Although they are not the largest expense, these services indirectly impact the ability to pay.
“Staff salaries, especially for supervisors, are the main factor in the increase in expenses. In addition to the basic salary, consortia must cover seniority and other additional costs, which further increases costs, especially in buildings with long-standing employees,” added Loisi.
In several buildings, the hours of the caretaker were reduced and, in many cases, the decision was made to hire cleaning staff to reduce common expenses (Illustrative Image Infobae)
These increases have led to the postponement of maintenance works such as painting facades or replacing elevators. This lack of attention puts the preservation of the building at risk and can affect the safety and value of the properties in the long term.
Rodrigo Martínez Daveño , a lawyer and consortium administrator, warned about the dangers of continuing to postpone works due to high costs. “If this situation continues for too long, the deterioration of the CABA building stock will be critical. It is advisable that consortiums find a balance between covering immediate costs and not neglecting maintenance that guarantees safety and functionality in the long term.”
Possible measures to mitigate the increases
Consortia and administrators have several measures at their disposal to mitigate the impact of increases in expenses and optimize the maintenance of the properties.According to Martínez Daveño, one of the most immediate solutions “is to reduce electricity and gas consumption, turning off the lights in common areas when they are not needed or limiting the use of boilers.”
However, in the medium and long term, more structural actions are proposed, such as eliminating overtime hours for the manager and reducing his working hours.
Martínez Daveño suggested financing maintenance work, such as painting facades or cleaning tanks, by paying for them in installments to ease the financial burden. “These strategies reduce expenses and ensure the maintenance of the building without compromising the well-being of the neighbors.”
To reduce costs, several consortia have eliminated overtime, rented out the doorman's office or terrace, hired cleaning companies to avoid compensation and suspended services such as boilers. In addition, the owners of the house should not receive payments for the use of electricity, water or gas.
High default rates seriously affect the functioning of consortia. When a group of owners and tenants do not pay, the cost is shared among those who do comply, increasing their expenses.
In several buildings, it is difficult to carry out preventive maintenance or painting of facades due to the increase in late payments, which complicates the financial equation of the consortium.
“The default rate, which had already reached 35% last year in some cases, has remained at similar levels over the past two months, creating a vicious circle where fewer and fewer people can cover the costs,” Loisi said.
Avoid litigation
When faced with the difficulty of paying expenses, it is essential to act before the problem becomes a dispute. Early communication with the administration allows for the negotiation of agreements or payment plans, avoiding more drastic measures.Luciani Otaño explained that the most common solution is to offer a payment plan, although it does not solve everything, since the owner continues to pay the monthly expense plus the fee. However, these agreements do not include interest or adjustments, which lightens the burden.
Another option is to make partial payments, demonstrating the willingness to comply. “Neighbors can request legal assistance or challenge the expenses at the assembly, highlighting the importance of open communication to fulfill commitments,” concluded Luciani Otaño.
www.buysllba.com
