Depreciation reports are essential documents for strata corporations and properties, regardless of whether they are loved or hated. These reports detail the current condition and long-term maintenance needs of a building’s joint assets, such as the roof, plumbing, and elevators. They evaluate the building’s condition, estimate the remaining lifespan of its components, and project future repair and replacement costs over a 30-year period.
B.C.’s mandated change
In April 2024, the provincial government of British Columbia implemented new regulations requiring strata councils and owners to obtain depreciation reports. This change aims to encourage proactive future planning instead of ignoring the need for maintenance. As of July 1 this year, buildings with more than five strata lots must have these reports, which need to be updated every five years. Strata corporations can no longer opt-out through a three-quarter vote at meetings. There will be a grace period for completing these reports, depending on the building’s location within the province.
Impact of the changes — a surprise for some
The recent regulations may have come as a surprise to some owners, buyers, and sellers. However, the benefits outweigh the drawbacks. Depreciation reports are valuable tools for planning a strata corporation’s budget and repairs for the upcoming years. Many working directly with strata corporations anticipated these changes and prepared accordingly. There was minimal negative feedback from clients regarding the new requirements.
Two reports go hand in hand, creating some cost savings
In response to the growing demand for electric vehicles and the shift away from gas-fired appliances in B.C., strata corporations are now required to conduct electrical planning reports alongside depreciation reports. These reports assess the building’s electric infrastructure capacity and provide insights into necessary upgrades, such as heat pumps and EV charging stations. Conducting both reports simultaneously can result in cost savings due to the overlap in electrical and HVAC equipment assessments.
Providing an executive summary of the reports can help simplify the information for homeowners and make it easier to understand the detailed content.
While budgeting according to report recommendations may lead to cost increases, the stricter requirements can ultimately benefit owners, buyers, and sellers in the long run. These changes promote financial preparedness, property valuation, and sustainability.
Key advantages
Depreciation reports offer three key advantages for owners and sellers: financial preparedness, property valuation, and sustainability. For strata corporations, these reports assist in planning long-term repairs and upgrades, preventing unexpected expenses for capital projects. They also provide funding models to anticipate future expenses and offer flexibility in funding options. Well-maintained buildings with updated reports attract potential buyers by providing transparency on future maintenance costs and the building’s financial health, ultimately maintaining or increasing property value.
Sustainability is a focal point in real estate, with electrical planning reports ensuring that building managers are aware of the electrical systems and their capacity. This knowledge helps owners and buyers determine if the building is prepared for EV charging infrastructure or needs adjustments to support sustainable environmental solutions.
The recent changes to depreciation…
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