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Sinking Fund Updates

In July 2009 changes were made to the Strata Schemes Management Act 1996 regarding sinking funds. The legislation now states that all Owner’s Corporation should develop a 10-year plan for their sinking fund.

However, there are no penalties for Owner’s Corporation who elect not to prepare a 10-year plan.

According to the Department of Fair Trading website, individual strata property owners who are concerned that their Owners Corporation is failing to act, may refer the matter to the Consumer, Trader and Tenancy Tribunal (CTTT) for an order instructing an owners corporation to meet its obligations to develop a plan. 

At The Strata Agency we strongly recommend that all Owner’s Corporations compile a comprehensive 10-year sinking fund and revise it at least every five years, regardless of the legal requirements. Having a documented plan, makes it easier for Corporations to manage the funds for the benefit of everyone in the scheme. A plan minimises the risk of having insufficient funds when, for instance, expensive building repairs need to be carried out.

Peter Berney, National Business Development Manager from Solutions ie assists Owners Corporations prepare and update their sinking fund plan.

Peter believes that using the help of an expert in the field can be advantageous for an Owners Corporation.

“While the basic principles of Sinking Fund Planning are quite simple, few individuals have the breadth or depth of experience to accurately assess the state-of-repair of the vast range of fixtures and fittings in most buildings, estimate their lifespan and then predict their maintenance and/or replacement cost over 10 years,” said Peter.

“Our experience after completing no less than 35 000 Sinking Fund reports are that the manufacturers predicted lifespan of an item is not always correct. They can be subject to location and environment factors and their actual lifespan can only be accurately understood after many years of experience.”

Engaging help to prepare your fund offers a:

• Fully trained building industry professional with decades of experience in property maintenance, project management and report generation
• Custom-built, Australian Sinking Fund Planning software and
• Vast, continuously updated knowledge bank of maintenance trends, costs and techniques designed to maximise the lifespan of your property while minimising the cost.

“You can be confident in the quality and accuracy of the Sinking Fund Plan you receive, and secure in the knowledge that there is a substantial and reputable company standing behind each report, ready to answer any questions you might have,” Peter said.

Peter said the advantages of updating the fund include eliminating special levies, effective budgeting for building maintenance costs so new owners know clearly the costs of unit ownership and ensures available funds for costs as and when they occur. As a general rule, Peter recommends that Sinking Fund Plans be updated every three to four years, depending on the size and complexity of your property.

If you have any further questions regarding sinking funds, please contact your Strata Manager at The Strata Agency.