Capital Expenditure Planning

Members of the VA have been working closely with local Chartered Surveyors to prepare accurate and long-term financial planning.  The future maintenance costs they have projected are based on the total replacement of VA 'infrastructure' when it reaches the end of its life - resulting in very high costs and a difficult future timescale of some things. This is the 'counsel of perfection' and the reality is, if well maintained, many areas should have an almost indefinite life span, while others of course will need early attention. A future capex maintenance programme therefore needs to be developed with some form of rolling contingency for unforeseeable things (like collapsed drains etc). For some areas, with proper maintenance, total replacement may be so far in the future as to be discounted in practical terms.

There are however areas where 'catch up' work is due as the estate ages and the proposal is to arrange a series of small works each year over the next few years amounting to a spend of circa £25,000 pa which will be a mixture of safety related things, practical things and cosmetic items. We have spent c.£20k in 2019 and this will have reduced the sinking fund as will the £25k proposed 2020 capex.

In respect of the service charge looking at 2021 and beyond, our thinking is to produce a plan that will increase service charges to replenish the funds spent and to ensure we are accumulating enough future funds in a way that will be acceptable to residents; we are thinking of a structured percentage rise over 3-5 years which we will develop over the course of this year ahead of the AGM in November.

The £25k Capex spend in 2020 would be used on projects some of which will make a visible, high profile difference. The Chartered Surveyors will make an initial shortlist of priority projects with anticipated costs so the VA will make the final project selection decision with a view to doing the work over the summer.