The impact of COVID-19 on the Program ... so far
Rent is the primary source of revenue on which the CEHL Co-operative Housing Program is run. Rent revenue is shared between CEHL and co-ops so they can manage their co-op business.
The diagram below outlines how funds were distributed in the last financial year with almost half of revenue dedicated to property maintenance and repairs (44%).
The CEHL rent model responds to household changing circumstances and supports households when it is most needed.
Impact on revenue
When COVID-19 restrictions were implemented throughout 2020, some household members lost their jobs or had reduced work hours that resulted in reduced income. During 2020, eighty-five (85) households applied for and received an immediate reduction in their rent. Across the Program this resulted in $163,000 of rent reductions.
In contrast, hundreds of households received income support payments from the Government to help during this time, funds that were a welcome relief for many.
The omnibus legislation that was introduced meant that household rent could not increase between 29 March 2020 and 28 March 2021. This meant that the new rent model could not be implemented in July 2020 as was originally planned, as a consequence, high income households continued to pay rent at less than 25% of main household income.
Impact on co-ops
CEHL shares 45% of revenue from rent with CERC[1] co-ops so they can manage their co-op and the maintenance, fund maintenance and council rates that the co-op is responsible for. During this period co-ops had a $400k reduction in expected revenue and CEHL a reduction of approximately $800k. Funds that would have been used predominately toward property maintenance.
Impact on employment costs
Because of lockdowns, border closures and uncertainly around travel, employees were not able to take usual levels of annual leave, resulting in an increase to employment cost accruals during the year. There were some cost savings due to reduced fuel and toll costs as the CEHL vehicle fleet remained garaged for most of the year.
Tax relief
The Federal Government through the Australian Taxation Office provided large charities with a $ 100k “cashflow boost” to help towards reduced revenue. CEHL received $63k in 2019-2020 and $37k in 2020-2021 which has been used to support CEHL’s revenue shortfall.
Impact on maintenance works
The lockdowns throughout the year (primarily 2020) meant that some works were put on hold until restrictions were eased. The good news is our Asset Management team have now caught up on completing most of these works.
We are experiencing a sharp increase of prices due to shortages on goods such as timber and some appliances, and in trades where there is now very high demand as the economic recovery focusses on building works.
CEHL has developed great relationships with our trades and is working closely with them to ensure we can continue to deliver. However, lead times have increased and maintenance delivery is now being planned with this in mind.
We will continue to monitor and seek to manage the ongoing impacts of the pandemic on the Program. We appreciate the co-operation and support that many co-ops have demonstrated throughout these challenging times.
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[1] Common Equity Rental Housing Co-operative