What is the legislation?
New strata laws commenced on 30 November 2016 and have been modernised to fit the reality of living in strata today. The Strata Schemes Development Act 2015 and Strata Schemes Management Regulations 2016 have also been introduced.
Strata is the fastest growing form of property ownership in Australia – there are now more than 270 000 schemes across the country. Legislation has been changed to meet this growing demand and addresses modern issues that the previous legislation did not incorporate.
The act includes more detailed requirements for the 10-year capital works fund plan (previously 10-year sinking fund plan). Section 80 of the Strata Schemes Management Act 2015 states that a 10-year capitals works fund plan is to include:
- Details of proposed work or maintenance,
- The timing and anticipated costs of any proposed work,
- The source of funding for any proposed work,
- Any other matter the owners corporation thinks fit,
- Any other matter prescribed by the regulations for the purposes of the section.
Why is it important to get a Capital Works Fund Plan?
Maintenance items and expenses of a capital nature commonly found in a Capital Works Fund include repairs or improvements to the building and the surrounding common property, such as painting, replacement of roofing, guttering, fencing etc. All of these items are required to be completed over a specified time frame to maintain the overall standard of the building.
The Owners Corporation must pay into its capital works fund by way of contribution, to cover anticipated spending of a long term, high cost. A Capital Works Fund is implemented by legislation to ensure all aspects of ownership and liability are met through the accumulation of smaller sums over time, this minimises surprise special or extraordinary levies needing to be struck to pay for large maintenance or repairs for the building.
Whilst there is requirements outlined by legislation to have a Capital Works Fund implemented and then updated every 5 years, Solutions in Engineering recommends updating your building’s sinking fund every 3 years to ensure accuracy of calculated projections and any maintenance required.