Capital Works or Sinking Fund Plans

1What is a Capital Works or Sinking Fund Plan?
A plan as to how the owners of a strata plan will repair and maintain common property and raise sufficient funds to cover the costs. The annual amounts required for the 10-year plan will vary between schemes, for instance, newer schemes may require relatively less money than the plans for older schemes with more repair work due.
2Do the owners need to get a Capital Works or Sinking Fund Plan?
Yes, there is requisite legislation in NSW, the ACT and Victoria to obtain a Sinking Fund Plan. For example, from July 2009, all strata schemes in NSW are required by law to have a 10-year sinking fund plan in place as defined in the Strata Schemes Management Act 1996. The 10-year plan must be approved by owners at an Annual General Meeting (AGM) and must be reviewed and adjusted, if required, each five years.
3What is the benefit of obtaining a Capital Works or Sinking Fund Plan?
A good plan should increase the value of your property by ensuring it presents well and is well maintained. Our Australian designed and owned software provides flexibility in our sinking fund recommendations to ensure that you
  • Do not have excessive funds sitting around in the bank
  • Have minimal but sufficient annual Sinking Fund contributions (no special levies)
  • The owners do not have to pay levies larger than are required
4Does a Capital Works or Sinking Fund Plan increase the amount that owners have to pay on an annual basis?
This is not a black and white answer; each sinking fund plan should reflect the individual needs of its scheme. On some occasions we have recommended a reduction in the amount being collected due to unnecessary money sitting idle in the Sinking Fund account. An increase may be recommended if the current amount being collected is insufficient to address the projected cost requirements of repairing, maintaining or renewing the improvements and its surrounds.
5Can Owners vary a Capital Works or Sinking Fund Plan?
Yes, it is their fund to use as they need, providing they meet their strict obligations to repair and maintain the common property.
6How often should a Capital Works or Sinking Fund Plan be reviewed?
We recommend a Sinking Fund Plan be prepared every 2-3 years.
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