A sinking fund is essential for managing ongoing maintenance and expenses associated with strata complexes. Without a sinking fund, your property manager will need to be reactive to problems instead of proactive and it can cost a lot more money in the long run. For example, gutters that are starting to rust may be treated with rust inhibitor and repainted. If they go undetected, they may need to be replaced and could cause rising damp or stained eaves that will also require repair and maintenance.
BCI have been helping strata managers for over 20 years to manage their portfolio with easy to read, accurate reports. BCI conduct strata inspections in Perth and produce reports that identify a list of defects and maintenance items that require attention immediately and in the following one to five years.
The good news is that the legislation is expected to be amended in the near future that will require every strata body to obtain a five to ten year maintenance schedule with a cost estimate. This creates a sinking fund that will cover the expenses required within that time frame.
Here is an exert from the proposed legislation amendment.
Strata Titles Act 1985 Incorporating the amendments proposed by the Strata Titles Amendment Bill 2018 Pt. 2 (Bill No. 80-2)
S.91 General Duty
- A strata company must —
- enforce the by-laws; and
- control and manage the common property for the benefit of all the owners of lots; and
- keep in good and serviceable repair, properly maintain and, if necessary, renew and replace —
- the common property, including the fittings, fixtures and lifts used in connection with the common property; and
- any personal property owned by the strata company,and to do so whether damage or deterioration arises from fair wear and tear, inherent defect or any other cause
S.100 Administrative and Reserve Funds and Contributions
(2) A strata company must, if it is a designated strata company, and may, in any other case:
(a) establish a fund (a reserve fund) for the purpose of accumulating funds to meet contingent expenses, other than those of a routine nature, and other major expenses of the strata company likely to arise in the future; and
(b) determine the amounts to be raised for payment into the reserve fund; and
(c) may raise amounts so determined by levying contributions on the owners in proportion to the unit entitlements of their respective lots.
(2A) A designated strata company must ensure —
- that there is a 10 year plan that sets out —
- the common property and the personal property of the strata company that is anticipated to require maintenance, repair, renewal or replacement (other than of a routine nature) in the period covered by the plan; and
- the estimated costs for the maintenance, repairs, renewal or replacement;
- other information required to be included by the regulations;
- that the 10 year plan is revised at least once in each 5 years and that, when revised, the plan is extended to cover the 10 years following the revision.
designated strata company means —
- a strata company for a scheme with 10 or more 14 lots; or
- a strata company included in this definition by the regulations. (The regulations will specify that a strata company with less than 10 lots but with a building replacement value over a certain amount is a designated strata company
- A strata company must prepare a budget for each financial year and submit it for approval to its annual general meeting.
- The budget must be prepared —
- taking into account, if applicable, the 10 year plan for the reserve fund; and
- in accordance with any requirements set out in the regulations and the scheme by-laws.
Having a regulation around what is required will allow the strata manager to outsource the compilation of such information and focus on other non-maintenance issues that arise. The reports will take the guess work out of what work is required and who is the most suitable trades person to take it on.
Often trades people can exaggerate the work required or genuinely feel that more work is needed to end at the same conclusion. With an experienced inspector who has no vested interest in the cost of the work being carried out inspecting the property, your council of owners will receive unbiased expert opinions on a scope of works and an estimated cost.
The requirements around such reports are yet to be determined however an experienced inspector in Strata Inspections and maintenance schedules should be able to guide you on what information is needed to collate an accurate sinking fund.
Here are some of the items inspected in our strata inspections in Perth and WA:
- Car parks and communal entertaining areas
- Rendered surfaces
- External brickwork
- Stairwells and landings
- Flues and ridges
- Verandahs and patios of common areas
- Pools and pool fences
- Fire breaks
- External boundary
- Retaining walls
- Fences, both perimeter and internal
- Detached structures, such as bin rooms and reception areas, and
- Non-structural items, such as paint work and letter boxes.
- Any other area of concern for the council for the owners.
Some of the areas BCI have conducted strata inspections in Perth and way beyond including properties in Port Headland, Broome, Connolly, throughout Perth city and CBD, Como, Northbridge, Innaloo, Fremantle, Cottesloe, Coogee, Manning, Belmont, Maylands, Subiaco, Beeliar, Rockingham and Mandurah. Interestingly, the issues that arise are often common for buildings of a similar age and style.
BCI also advise on how the rectification works should be carried out. The idea is that anyone can pick up the report in one year or five years time and see what works are required and how they should be approached.
BCI are on call if you have any queries regarding your strata or any aspect of your report. You receive your inspector’s mobile number and can call them at anytime to discuss your report.
For a free quote, call our experienced team that are ready to help you through this process. BCI only employ registered builders or engineers to conduct your strata inspections in Perth and beyond. You can relax knowing that not only are they registered and fully insured, but they come with over 30 years experience each. Finding inspectors in Perth that are this qualified and easy to work with is hard!