It’s a good idea for an Owners Corporation to ensure their scheme has a healthy sinking fund. This fund ensures money is available for future capital expenses such as painting the building, replacing carpets, or installing new roofing.

The Legal Requirement

In 2009, the NSW Government amended the Strata Schemes Management Act 1996 to require Owners Corporations established after July 2009 to prepare a 10-year sinking fund plan. Section 75A of the Act states:

• A plan must cover anticipated major expenses over the 10-year period starting from the first AGM.
• The initial plan must be finalised by the second AGM.
• The plan must be reviewed and adjusted at least every five years.
• Owners Corporations may engage expert assistance to prepare the plan.
• The regulations may extend this requirement to all Owners Corporations, regardless of when they were established.

Why Planning Matters

While there are no direct penalties for failing to prepare a 10-year plan, Metro Strata strongly urges all Owners Corporations—not just those recently established—to document how they will repair and maintain common property over the next decade. A clear plan ensures:

• Funds are available for expensive repairs when needed,
• Owners can avoid sudden, unexpected special levies, and
• Capital works are managed fairly and transparently for all lot owners.

Tailoring the Plan to Your Scheme

According to the NSW Department of Fair Trading, the amount required for a sinking fund plan will vary:

• Newer schemes may need less funding initially,
• Older schemes often require more for ongoing repairs and replacements.

Each plan must reflect the unique needs of the building and be approved by owners at an annual general meeting.

Getting Expert Help

Preparing a 10-year sinking fund plan can feel daunting, especially for older buildings with a wide range of fixtures and fittings to assess. Fortunately, there are businesses that specialise in preparing these plans. Their expertise helps Owners Corporations predict lifespans, estimate costs, and plan effectively.

What If Your Scheme Stalls?

If members are concerned that their Owners Corporation is not preparing a required plan, they may escalate the matter to the Consumer, Trader and Tenancy Tribunal (CTTT). The Tribunal has the power to issue orders requiring compliance.

Final Word

A well-prepared 10-year sinking fund plan is more than just a legal obligation—it’s a safeguard for your building’s future. With proper planning, Owners Corporations can manage capital expenses smoothly and protect all owners from financial surprises.