A sinking fund, also referred to as a reserve or capital works fund, is maintained by body corporates within a strata-titled property scheme. This fund is specifically designated to cover essential and justified expenses related to the upkeep, repairs, or replacement of common property and capital items. Lot owners contribute to this fund, collectively sharing the financial responsibility for maintenance and repair costs.

At Olive Tree Consulting Group, we specialise in Sinking Fund Forecasts. Our experts meticulously analyse your property’s current and future maintenance needs, offering comprehensive financial projections. This helps you plan confidently, ensuring your sinking fund remains robust and resilient in the face of potential expenses.

A sinking fund forecast is a comprehensive projection outlining the anticipated expenses related to capital works within a strata scheme. Typically spanning a specified period, often 10 or 15 years, this forecast calculates the required financial contributions from lot owners to support current and future capital projects.

In adherence to regulations, sinking fund forecasts account for:

• – Anticipated expenditures of a capital or non-recurrent nature.
• – Replacement of significant capital items.
• – Other costs that are deemed reasonable to be covered from the capital fund.

Watch out for insufficient funds, recurring special levies, or delays in necessary maintenance. These could indicate an unhealthy sinking fund. Olive Tree Consulting Group offers proactive solutions to assess and strengthen your sinking fund, allowing you to address potential issues before they escalate.

Regular sinking fund assessments are crucial for maintaining financial health. We recommend periodic reviews to ensure your sinking fund aligns with your property’s evolving needs. Our experts can tailor a schedule that suits your unique situation, providing ongoing support for your financial planning.

State regulations across the nation mandate that funds, such as sinking funds, reserves, or capital works funds, must have budgets prepared by qualified professionals. The specific regulations vary by state, and the relevant legislation for each state is outlined below:

• Queensland: Body Corporate and Community Management Act 2008

• New South Wales: Strata Schemes Act 2006

• Victoria: Owners Corporations Act 2006

• South Australia: Statutes Amendment (Community and Strata Titles) Act 2012

• Western Australia: Strata Titles Act (General) Regulations 2019

At Olive Tree Consulting Group, our team is well-versed in these regulations and stays updated on any legislative changes. We offer the expertise to assist in the preparation of sinking fund forecasts and budgets for your strata property.

Provisions should be made for the present fiscal year, including the allocation of funds to cover anticipated expenditures for the coming nine years. To maintain compliance, it is necessary to update the fund forecast on an annual basis.

We often see recurring examples of maintenance costs within a strata development that can creep up and require substantial funding. Common body corporate maintenance costs that often necessitate significant funding include:

• – Structural repairs (such as the foundation or driveways)
• – Roof replacement
• – Exterior painting
• – Landscape and grounds maintenance
• – Elevator or lift maintenance
• – Common area renovations
• – Plumbing, piping and electrical wiring
• – Electrical equipment (air-conditioners, sump pumps)
• – Fire safety system upgrades
• – Pest control and extermination
• – Energy efficiency improvements
• – Asbestos removal
  
  

It’s important for a body corporate to anticipate and budget for these potential high-cost maintenance items to ensure the long-term sustainability and value of the property. Contact us for expert assistance in sinking fund forecasting and budgeting for your strata property.