In this article 8 topics
The new tax year has already begun, and this is exactly the time to get your annual budget in order and make sure 2023 will be calm, good and well managed. If you have looked at the business pages lately, you have surely read that we are all about to experience dramatic price increases across many sectors of the economy, and the world of building management and maintenance is no exception. How does this show up when preparing the budget for the new year? Does it affect the building you manage? What is essential to take into account? Here are some important line items, along with a few tips from the experts at Achla Group, for peace of mind and the best possible management.
Electricity costs
What is the expected increase? 8.2%
What can you do?
Electricity is expected to rise by 8.2%. The rate increase for household consumers naturally also affects the management of the property you maintain, but there is good news too. If you don't want to end up with bigger expenses, it is worth considering electricity-saving solutions, and there are quite a few.
First, you can replace light fixtures and switch to energy-efficient lighting. This upgrade alone is expected to save a good deal on ongoing electricity costs, especially in buildings where the power works overtime. LED lighting is energy efficient, and its electricity consumption is about 50% lower than traditional fluorescent lighting.
It also pays to make smart use of systems designed to save us money, and now is exactly the time to apply them in the building you manage as well. Among other things, you can use chillers (an energy-efficient cooling solution), pay attention to the elevators, set the lighting to operate on sensors and run a general check of the systems so you can implement energy-efficient ones.
Municipal property tax (arnona)
What is the expected increase? 1.4% (national average)
What can you do?
Unlike electricity, there is no way to save on or reduce arnona costs, but it is important to account for the expected increase and add it to the annual budget. Check the expected rate of increase in the area where the property is located so you can calculate it accurately. It is also a good idea to inspect the property for areas under renovation or areas unfit for use, and to apply to the municipality for an arnona exemption for them.
Rising water prices
What is the expected increase? 3.5%
What can you do?
Water prices are also expected to rise starting in January 2023. Add the percentage increase to the 2022 budget, as reflected in the ongoing expenses of the building you manage, and include it in the annual budget. Here too, although we cannot avoid these expenses, we can plan energy-efficient systems and simply waste less water. It's good for the country, good for the residents and good for your pocket.
Fuel costs
What can you do?
Fuel prices keep rising steadily (they sometimes drop too, but unfortunately that is not the usual situation). If the property you manage has systems that run on fuel, such as generators, keep this in mind and make sure the increase is reflected in the annual budget. Also account for fuel payments to employees who are entitled to reimbursement from you.
Cleaning supplies
What is the expected increase? About 10%
What can you do?
The retail sector is also showing price increases, and if you have decided not to hire a cleaning company such as Achla Group, you will definitely need to account for the cost of cleaning supplies. The expected increase in cleaning supply prices is about 10%, and it is important to factor it into the ongoing expenses in the annual budget as well.
Contingency expenses
Planning is important, but as with everything in life, you can't prepare for everything. So that unexpected expenses don't catch you off guard, try to prepare for them in advance and add a contingency line item for unforeseen expenses, based on the parameters relevant to the building you maintain.
Here are a few factors you can take into account:
- The building's age
- The building's visual condition
- The condition of its systems
- A lean or generous budget
Budgeting for services that improve residents' quality of life
What can you do?
In today's competitive market, one of the factors that attracts tenants is the added services a tower offers, such as concierge, community life, security, and maintenance and repair services by an experienced company like Achla Group.
That is why we strongly recommend budgeting for quality-of-life services as well and including them in the annual budget, alongside the ongoing, "cold" and essential expenses. At the end of the day, there are people here who make up a community, and you are responsible for a significant part of their quality of life. Among other things, it is worth thinking about renovations, enforcing the house rules, various legal processes, opening the parking lot to the public, landscaping and other expenses that will make life in the building more pleasant for everyone.
Most important: review before you plan
Just before your planning gets underway and the 2023 budget takes shape, we strongly recommend pausing to draw conclusions from the past year's budget. Often, this review alone is enough to help you prepare better for the next year, but of course it is also important to draw conclusions from it. Check: Is there a system you are investing in more than necessary? Were there overruns against last year's budget? If so, why did they happen? How can you prevent them next time? Are there expenses that should be included in the 2023 budget, so it needs updating? Based on your conclusions, you can prepare in the best way for the next tax year and run an exemplary property.
Wishing you a good, well-managed new year from Achla Group!
