Personal Finance

Cutting down maintenance charges

Meera Siva | Updated on October 21, 2018 Published on October 21, 2018

Apartment complexes can take simple steps to reduce their expenses on upkeep

“Why is the monthly maintenance service bill so high at my high-rise complex?” Lousie asked no one in particular. Fellow passengers in the metro train, who were used to his negative views on property, knew better than to answer.

“My bills have been shooting up faster than the petrol price. The worst part is that there is no service for residents and I don’t know where the money goes,” he continued.

Drowsie, a senior citizen who has been an office bearer in many housing societies, decided to respond. “There are various expenses in a residential complex, big or small. Some — such as taxes, staff salary, audit fees, service contract payments for security and housekeeping, and annual maintenance contracts (AMC) for equipment including lifts and diesel generators — are fixed expenses. Many others including common area electricity charges, waste disposal, water and diesel expenses for backup power, vary based on usage,” he said.

He explained further: “The major costs are for electricity, housekeeping and security work. Water charges can be in the top of the list, say, in summer months, or in certain complexes all through the year.

“AMC also tends to be among the top five expenses. Costs differ based on what facilities exist in the complex. For example, if there are lots of fixed assets — gym, club house, swimming pool, multiple lifts — the costs will be higher. It also varies from month to month based on occupancy, usage and seasonal factors.

“Besides these, funds must also be set aside for replacement of equipment, painting and other structure maintenance.

“There is no apartment complex where all residents feel the charges are reasonable. Those with smaller houses, owners with unoccupied units and those who don’t use the swimming pool or other common facilities often feel they are over-paying,” he said. Drowsie noted that as it is not possible to charge on actual usage, associations use a mixed approach — dividing fixed charges equally among all, and sharing variable charges based on either the size of the apartment or occupancy.

Saving power

Rosie, who is quite positive and enthusiastic about property investments, joined the conversation. “It is not true that maintenance bills only increase. I recently read that a housing society in Mumbai had a major reduction in their maintenance bill — from ₹18,000 per month when the society was formed in November 2016 to ₹3,500 per month this year.

“Their analysis of the costs showed that the power bill for the common area was the major expense — ₹3.6 lakh a month. They took various steps — switching to LED lights, installing roof-top solar panels and setting up sensors to turn off lights when not required — to cut the power bill. Consumption reduced to as low as ₹5,000 per month,” Rosie said.

“Power used in common areas is often not monitored and can account for 15-20 per cent of the maintenance charges. Also, motors used to pump water to overhead tanks are a major consumer of energy. Using the right kind and size of pump can reduce electricity bill by 5-10 per cent,” Drowsie chipped in.

Water costs

“You can save power by using less water — if you pump less clean water to tanks, there will be lesswaste water, too, to treat in STPs (sewage treatment plants),” said Housie, a young techie who seeks data.

“Simple steps such as fixing leaky taps, automatic shut-off of pump when overhead tanks are filled and using recycled waterfor gardens can reduce water usage and directly translate to reduced maintenance cost,” said Drowsie.

“Residents can do their bit here. For example, using aerators in taps reduces water outflow from 10-12 litres per minute to 3 litres per minute — a typical family can potentially save 20 litres a day. In a large complex, this starts to really add up,” said Housie.

“Yes, saving water can help in other ways, too. For instance, apartment communities that buy tanker water during summer months can really cut down expenses by reducing water usage,” added Rosie.

Drowsie said apartments can also recharge ground water to enhance bore-water supply and reduce reliance on water tankers. “Rain water harvesting is a proven method to increase ground water levels,” he said. Housie added that there are Internet-of-Things-based sensors that can detect water leakage and apps that track water usage patterns in a community.

Generate revenue

Rosie noted that many communities also generate revenue from their assets, thus reducing collections. “By renting out the club house to, say, non-residents, you can earn rental income. In fact, even waste generated can be turned into an asset, while doing good to the environment. I read that an apartment complex in Mumbai composts its waste — about 295 kg per day — and uses the manure in its garden, and generates revenue by selling it,” she said.

The author is co-founder,

RaNa Investment Advisors

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