Strata titled properties operate sinking funds (also known in different parts of the country as reserve funds or capital works funds) to budget for and raise the appropriate monies required for the long-term upkeep of common property. Monies raised by levy contributions from lot owners in a strata scheme are held by the body corporate to spend on maintaining and replacing capital items.
Across the nation state body corporate and community management regulations require a sinking fund (or reserve or capital works fund) budget to be prepared by an appropriately qualified professional. The Quantity Surveyors at Acumentis are experienced in working with strata management to budget for funds to maintain, repair, renew or replace common property assets or areas, and advise on the approach to raise these funds.
Fund forecasting and planning for future capital expenditure can avoid having to raise financially stressful special or one-off levies to meet unexpected or non-planned expenditure.
A sinking, reserve or capital works fund, held by body corporates of a strata titled property scheme is a fund that exists to pay for necessary and reasonable maintenance, repairs or replacements of common property and capital items. The fund collects contributions from lot owners to share the costs of maintenance and repairs.
A sinking fund forecast is a detailed estimate of the likely costs associated with capital works around the strata scheme. The estimate covers a specific time frame, generally 10 years, and then calculates how much is to be raised from lot owners to fund those works now and in the future.
Forecasts allow for (in accordance with regulations):
Across the nation, state body corporate and community management regulations require a sinking fund (or reserve or capital works fund) budget to be prepared by an appropriately qualified professional. The regulations differ by state and are linked below;
Queensland – Sinking Fund Forecast – Body Corporate and Community Management Act 2008
New South Wales – Capital Works Fund Plan – Strata Schemes Act 2006 (formerly known as a Sinking Fund)
Victoria – Maintenance Plans - Owners Corporations Act 2006
South Australia – Sinking Fund Budgets - Statutes Amendment (Community and Strata Titles) Act 2012
Western Australia – Maintenance Plans - Strata Titles Act (General) Regulations 2019
The team at Acumentis understand these regulations and are up to date with legislative changes. Our team of qualified professionals can assist in preparing a fund forecast and budget for your strata property.
Allowances must be made for the current financial year, and also to reserve an amount to meet likely spending for at least the next nine years into the future. To remain compliant the forecast must be updated every year.
Typically, we often see recurring examples of maintenance costs within a strata development that can creep up and require substantial funding, such as:
Avoid having to raise financially stressful special levies to meet non-planned expenditure. Contact the experts at Acumentis to assist in fund forecasting and budgeting for your strata property.
Contact your local Acumentis office for a no obligation consultation and quote outlining how we can assist with your fund forecast budgeting.
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