Why Every NSW Owners Corporation Needs a 10-Year Sinking Fund Plan

Every NSW strata scheme needs money set aside for the big jobs: repainting the building, replacing carpet, renewing a roof, upgrading a lift. That money sits in the capital works fund, and the document that decides how much goes into it is the 10-year capital works fund plan.

You will still hear this called a “sinking fund plan”. That was the term used under the old Strata Schemes Management Act 1996. The fund was renamed the capital works fund when the Strata Schemes Management Act 2015 (NSW) replaced it, and the plan is now governed by section 80 of that Act.

What the Law Actually Requires

Section 80 applies to every owners corporation, not just schemes registered after a particular date. In short:

• The plan covers anticipated major expenditure from the capital works fund for a 10-year period starting at the first annual general meeting (section 80(1)).
• It must be finalised by the end of the next AGM after the AGM it was prepared for (section 80(5)).
• It must be reviewed at least once every five years, and can be revised or replaced by resolution at a general meeting (section 80(3)).
• A fresh plan is prepared for each following 10-year period (section 80(2)).
• The owners corporation is to implement each plan so far as practicable (section 80(7)). Preparing one and then ignoring it is not what the section contemplates.

What Has to Be In the Plan

A plan is not a number on a page. Section 80(4) requires it to be in the form prescribed by the regulations and to set out:

• details of the proposed work or maintenance
• the timing and anticipated cost of that work
• the source of funding for it
• anything else the owners corporation thinks fit, or the regulations prescribe

New: the initial maintenance schedule must be considered

Under section 80(1A), an owners corporation must consider the initial maintenance schedule prepared by the original owner when preparing its first 10-year plan. For a newly registered scheme this matters: the developer’s schedule is the starting point, and the committee should be asking for it rather than building a plan from scratch.

New: sustainability infrastructure counts

The estimates an owners corporation prepares for its two funds now expressly include installing, replacing or repairing common property infrastructure, fixtures and fittings for the sustainable use of the scheme – the Act gives electricity meters, solar panels and sustainable building materials as examples (section 79(2)(e1)). If your scheme is weighing up solar or metering upgrades, that work belongs in the forecast rather than arriving later as a special levy.

Why It Matters Beyond Compliance

A realistic plan does three things for owners:

• Money is there when an expensive repair falls due, instead of being raised in a hurry.
• Owners avoid sudden special levies, which tend to land hardest on the people least able to absorb them.
• Costs are shared fairly across time, so an owner who sells in year three has contributed to the wear they caused.

How much is enough varies. A newly built scheme usually needs less in the early years; an older building with ageing plant and a large facade generally needs considerably more. NSW Fair Trading publishes general guidance, but the figure has to reflect your building.

Getting Expert Help

Section 80(6) expressly allows an owners corporation to engage expert assistance. For an older building with a wide range of fixtures, plant and finishes, a specialist quantity surveyor will estimate remaining lifespans and replacement costs far more reliably than a committee working from memory. The cost of the report is usually small against the cost of getting the forecast wrong.

If Your Scheme Will Not Prepare One

If an owners corporation is not meeting its obligation, an owner can apply to the NSW Civil and Administrative Tribunal (NCAT), which can make orders requiring compliance. NCAT has handled strata disputes since 2014, when it absorbed the former Consumer, Trader and Tenancy Tribunal. Most matters go to NSW Fair Trading mediation first.

Final Word

A 10-year capital works fund plan is a legal obligation, but the reason to take it seriously is financial rather than legal. It is the difference between a building that funds its own upkeep and one that repeatedly asks owners for money it should already have.

Source: Strata Schemes Management Act 2015 (NSW), sections 79 and 80.