Common sense alone is not enough for cost-effective management of an apartment building

Matters related to the management and maintenance of apartment buildings have demonstrated rapid development in recent decades.  Although specialist know-how as well as various guidance materials and recommendations are constantly updated, it is often difficult to convert real estate owners to following practical advice. Still, these days common sense alone is not enough for the smart and cost-effective apartment building management.

Property maintenance demands that one sees the big picture

Reasonable management of an apartment building which meets present-day requirements is so complicated that implies having knowledge consolidated in property maintenance standards and guidelines on the basis of the know-how gathered by leading experts and companies over time. Apartment owners need to carefully consider whether it is reasonable to take the tasks related to the maintenance of the building upon themselves, including the responsibilities covered by designers as well as construction, HEVAC, water supply and electrical engineers, lawyers, construction and maintenance technicians and many others or to outsource these to professionals.

Better management of maintenance operations as well as reducing the expenses of property owners start with all the parties, including apartment owners and certified engineers, receiving information in time and having as common an understanding as possible. This means owners need to be ready and willing to accept professional advice and expertise.

Experience shows that the apartment owners’ willingness to cost-effectively manage the building themselves is often not enough because they lack sector-specific knowledge and because various people have various understandings of how to solve problems. For example, it is difficult to implement the principles of joint management in a building as apartment owners often lack the knowledge of where the property in their common ownership begins and ends and what the best method of its maintenance is.

Planning future expenses of an apartment building

In our changeable Nordic climate, the average full life cycle of apartment buildings is considered to be around 50 years, after which the structure might need a complete overhaul for the new life cycle. So, as a rule of thumb in planning maintenance costs one should remember that the cost of the building construction should be viewed as 20% while the expenses on repairs and scheduled maintenance for the following 50 years will constitute the remaining 80%.

At the same time, various studies confirm that scheduled property maintenance, proper documentation of the building’s structural condition and the use of the latest engineering know-how can reduce the costs by up to 30%. As far as the cost of apartment building management goes, this means saving up to dozens of thousands of euros.

Buying an apartment: the vicious circle

 Today, the principal considerations in purchasing an apartment are its price and location. Other factors to contribute to closing a sale are energy efficiency, a near zero-energy building, low-energy building, heat recovery ventilation, geothermal heating, heat pump or other features referring to latest added value.

In addition, understanding the maintenance needs of an apartment building and ensuring it meets the design parameters requires the buyer to possess thorough knowledge. It is not uncommon to start having regrets about a purchase decision made on the basis of initial sales information after having used the real estate for a while as the actual high maintenance costs of the building become apparent. When it becomes clear the repairs will be unexpectedly expensive, the apartment is put up for sale again, and history repeats itself if another poorly informed buyer is found.

A number of factors contributes to such adverse developments that hit apartment owners’ finances hard. One of the main reasons is that innovative construction and finishing materials, technologies and equipment are used too boldly in our Nordic climate. In addition, the information necessary for future maintenance is often disregarded although it should be of interest to potential apartment buyers and apartment owners in functioning associations alike.

For making property maintenance decisions appropriate for the financial capacities of apartment owners and associations, specialists with long-term hands-on experience in maintenance and repairs, who will be able to assess the structural integrity of the apartment building and future costs, should be involved in the early stages of the decision-making process.

Understanding the meaning of the maintenance debt of an apartment building  

Better management of an apartment building as a whole is always related to planning maintenance costs, which should be done as early as at the stage of property design and planning. In case this has not been at the right time with sufficient expertise while savings have been made through neglecting preventive measures, the result is the emergence of a rather hefty so-called maintenance debt of the property, which will be increasing with time.

The maintenance debt of an apartment building refers to the money that needs to be invested in the maintenance and repairs of the building as a whole and its parts in the apartment owners’ common ownership in order to ensure conformity to modern requirements, safety of all its dwellers and the structural integrity necessary for long-term preservation.

One of the main reasons for postponing the maintenance of an apartment building is often the lack of information and the necessary funds, but experts in the maintenance field can be of assistance even when such buildings are concerned.

Planning the resources for the cost-effective management and maintenance of modern apartment buildings starts with apartment owners’ awareness and also with how clearly the relevant information has been documented, presented, and communicated. And it is the smooth and coordinated cooperation of apartment owners, their associations and experienced property management specialists that is needed for increasing awareness and ensuring the apartment building meets all effective requirements, functions properly, and is well-maintained and safe for the dwellers.

Veiko Välja, property manager at Stell Eesti