It is one of the most common questions asked by strata committees and owners: how much money should our capital works fund have?
The short answer is that there is no single dollar amount, percentage or per-lot benchmark that is right for every scheme.
A six-lot walk-up building and a 200-lot apartment complex with lifts, a pool and extensive shared facilities will have very different future expenses. Even two schemes of a similar size may require different balances because of their age, condition, construction, location and maintenance history.
For a capital works fund in NSW, the more useful question is not simply “How much is in the account?” It is:
Will the scheme have enough money available to complete its expected capital works when those costs fall due, while allowing for changing prices and unforeseen needs?
The answer should be found in the scheme’s 10-year capital works fund plan, annual budget, current fund balance and anticipated levy income.
What is a capital works fund?
A capital works fund holds money for capital expenses relating to the owners corporation’s property and common property. It was previously known as a sinking fund in strata, and some owners still use the older term.
The fund is generally used for significant or longer-term work such as:
- Painting or repainting common property
- Repairing, replacing or upgrading common property
- Replacing roofs, lifts, fencing or major building systems
- Renewing fixtures and fittings forming part of common property
- Acquiring or replacing owners corporation property
- Project management, supervision and related costs
- Installing, repairing or replacing eligible sustainability infrastructure
This is different from the administrative fund, which covers regular operating costs such as cleaning, utilities, insurance and routine services. The phrase strata maintenance fund is sometimes used informally, but NSW legislation distinguishes between the administrative fund and the capital works fund.
Most NSW schemes must establish a capital works fund. A limited exemption may apply to a two-lot scheme where the buildings are physically detached, no building or part of a building sits outside the lots and the owners corporation unanimously resolves not to establish the fund.
Is there a minimum capital works fund balance in NSW?
NSW strata legislation does not set a universal minimum balance for a capital works fund.
Instead, each owners corporation must plan for the actual needs of its scheme. It must prepare a 10-year capital works fund plan and, when estimating the contributions required at each annual general meeting, consider the plan and the objective of carrying out as many of the scheduled items as practicable.
This means a $100,000 balance could be more than adequate for one building and seriously insufficient for another.
For example, a newer, smaller scheme with limited common property may have relatively few major expenses forecast in the next several years. An older apartment building expecting facade repairs, lift replacement and waterproofing work may need a much larger amount available – or a detailed strategy for building the required balance over time.
The number in the bank account only becomes meaningful when it is compared with:
- The timing and estimated cost of planned work
- Expected capital works levies over the same period
- Existing commitments and approved projects
- Building cost inflation
- A reasonable contingency for unexpected work or cost increases
- The likelihood of defects or repairs not yet included in the plan
Use the 10-year capital works fund plan as the benchmark
The capital works fund plan should be the starting point for deciding how much the scheme needs.
A useful plan identifies the common property items that will require repair, renewal or replacement, estimates when the work will be needed and forecasts the likely cost. It should then help the owners corporation set contributions at a level that supports the expected expenditure.
The NSW Government’s Capital Works Fund Planner accounts for:
- The fund’s current balance
- Capital works levy income
- The scheme’s unit entitlements
- Expected costs and the years in which they are likely to occur
- A contingency allowance
- Assumed building cost inflation
Looking at this information across the full 10-year period is more useful than trying to maintain an arbitrary balance every year. A fund may appear high immediately before a major project and then fall significantly when that planned work is completed. That does not necessarily mean the scheme is underfunded; the movement may be exactly what the plan anticipated.
Conversely, a healthy-looking balance can be misleading if several major projects are approaching and the forecast costs are higher than the current balance and expected contributions combined.
A practical way to assess whether the fund has enough
Committees can use the following four-step review.
1. Confirm the current position
Start with the latest financial statements and identify:
- The current capital works fund balance
- Unpaid capital works levies
- Money already committed under signed contracts or approved work
- Approved special levies or loans
- Any transfers to or from another fund
The headline balance may not represent money that is genuinely available. If a substantial amount has already been committed to a project, assess the uncommitted position as well.
2. Map the work and costs due
Review the plan year by year. Confirm which projects are due, their estimated costs and whether those estimates remain realistic.
Pay close attention to high-value assets and common sources of unexpected expenditure, including:
- Roofs and waterproofing
- Balconies and facades
- Lifts
- Fire safety systems
- Plumbing and drainage
- Electrical infrastructure
- Driveways, car parks and retaining walls
- Pools, gyms and other shared facilities
- Painting and flooring in common areas
Where the building has known defects or recurring maintenance issues, check whether the plan properly accounts for investigation, professional advice and rectification—not just surface repairs.
3. Add expected contributions
Calculate the capital works levies expected to be received before each project is due. Allow for any material levy arrears rather than assuming every contribution will be collected immediately.
A simple planning check is:
Current available balance + expected contributions − forecast expenditure = projected balance
This should be assessed for each year, not only at the end of the 10-year period. A plan that finishes in surplus can still have a cash shortfall in year three if an expensive project occurs before sufficient contributions have accumulated.
4. Test the assumptions
Ask whether the forecast includes:
- Current quotes or defensible cost estimates
- Building cost inflation
- Professional and project management fees
- GST where applicable
- Access costs, approvals and related work
- An appropriate contingency
- Changes to the condition or use of the building
If the plan relies on old estimates or does not reflect the building’s current condition, the projected balance may provide false comfort.
What changed on 1 April 2026?
The NSW strata law changes that commenced on 1 April 2026 introduced a prescribed standard form for 10-year capital works fund plans.
An owners corporation must use the standard form when it:
- Prepares its first 10-year plan for a new scheme
- Revises an existing 10-year plan, or
- Prepares a replacement after an existing plan has reached the end of its 10-year period.
Schemes with an existing plan that is not yet being revised or replaced do not need to immediately convert it. However, every plan must still be reviewed at least once every five years, and NSW Government guidance recommends yearly review to support accurate budgeting and levy planning.
The April reforms also strengthened requirements for new multi-storey schemes. The original owner—usually the developer—must engage an appropriately qualified independent quantity surveyor to certify that the initial maintenance schedule uses the required standard form. The surveyor must also review the initial estimates of contributions to the administrative and capital works funds and certify that, based on the expenses provided by the original owner, they meet expected expenditure for the year following the first AGM. Evidence of the review, certification and the surveyor’s independence must be provided to the owners corporation at least 14 days before the first AGM.
For committees and owners, the practical message is clear: the focus is shifting towards more consistent, transparent and evidence-based planning. The new standard form does not create one required fund balance, but it provides a stronger framework for working out what each scheme needs.
Signs a capital works fund may be underfunded
A low balance is not the only warning sign. Look for the relationship between the balance, the plan and the building’s needs.
Potential indicators of underfunding include:
- Scheduled work exceeds the available balance and projected levy income
- Important projects are repeatedly deferred because of cost
- The plan has not been reviewed within five years
- Cost estimates have not been updated for inflation
- Known defects or major repairs are missing from the plan
- Levies have been kept artificially low despite increasing maintenance needs
- The scheme regularly relies on special levies for foreseeable work
- There is no meaningful contingency for unexpected costs
- Levy arrears are affecting cash flow
- The plan does not reflect the building’s actual condition
Repeated special levies do not automatically prove poor management. An unexpected defect or emergency may require urgent funding even in a well-run scheme. However, repeated levies for predictable work can indicate that earlier contributions or planning were inadequate.
Can a capital works fund have too much money?
A larger balance is not automatically better.
The aim is to collect enough to meet the scheme’s legitimate capital needs at the right time—not to build an unexplained surplus. Owners corporations should be able to show how proposed contributions relate to forecast work, timing, inflation, contingency and the long-term interests of the building.
Overfunding can place unnecessary pressure on current owners, particularly when the plan does not justify the amount being accumulated. Underfunding, however, can lead to deferred maintenance, sudden levy increases, special levies or borrowing costs.
Good planning aims for an appropriate balance between affordability today and readiness for future work.
What should a committee do if there is not enough money?
If the forecast shows a shortfall, the owners corporation should address it early rather than waiting until work becomes urgent.
Depending on the circumstances, funding options may include:
- Gradually increasing regular capital works levies
- Raising a special levy
- Obtaining a strata loan
- Staging non-urgent work where professionally appropriate
- Using a combination of funding approaches
Any decision should consider the urgency of the work, the owners corporation’s duty to maintain and repair common property, the overall cost of delaying repairs and the financial impact on owners.
The committee may also need updated advice from a quantity surveyor, building consultant, engineer or other qualified professional. Larger or more complex buildings should ensure the expertise used to prepare the plan is appropriate for the scheme.
How often should the balance and plan be reviewed?
The 10-year plan must be reviewed at least every five years, but the fund position should be reviewed as part of the annual budgeting process.
An annual check allows the committee to update:
- Completed, deferred or newly identified work
- Current fund balances and levy arrears
- Cost estimates and inflation assumptions
- Project timing
- Building condition and emerging defects
- Contingency requirements
Regular review gives owners more notice of changing contributions and reduces the risk of preventable funding shocks.
The right balance is the one supported by a realistic plan
There is no standard figure that determines whether a capital works fund in NSW is healthy. The appropriate amount depends on the building, the work ahead and when the money will be needed.
A well-managed scheme should be able to explain:
- What capital work is expected over the next 10 years
- When each project is likely to occur
- What it is reasonably expected to cost
- How the work will be funded
- Whether the assumptions are current and include inflation and contingency
When the balance, levy strategy and 10-year plan work together, owners have greater visibility and the scheme is better prepared to maintain its common property over the long term.
Need clearer financial and maintenance planning for your scheme? Strata Plus works with committees to support informed budgeting, transparent reporting and proactive management of capital works across NSW. Contact our team to learn more.
This article provides general information only and does not constitute legal, financial or building advice. Requirements and appropriate funding levels depend on the circumstances of each strata scheme. Committees and owners should obtain qualified advice where needed.
FAQS
How much should a capital works fund have in NSW?
There is no universal minimum balance or per-lot amount. The fund should hold, or be forecast to receive, enough money to meet the scheme’s expected capital expenses when they fall due. The appropriate balance depends on the 10-year plan, current fund position, expected levies, project timing, inflation and contingency.
Is a capital works fund the same as a sinking fund?
Yes. “Sinking fund” is the former NSW term for what is now called the capital works fund. It holds money for significant repairs, renewals and replacements involving owners corporation property and common property.
How often must a capital works fund plan be reviewed?
A NSW strata scheme’s 10-year capital works fund plan must be reviewed at least every five years. NSW Government guidance also recommends reviewing it yearly to support more accurate budgets and levy planning.
What happens if a strata scheme does not have enough money for repairs?
The owners corporation may need to increase regular levies, raise a special levy, obtain a strata loan or use a combination of funding options. It should consider the urgency of the work, legal maintenance obligations, the cost of delay and the financial impact on owners.
What changed for capital works fund plans in April 2026?
From 1 April 2026, NSW strata schemes must use the prescribed standard form when preparing a new 10-year capital works fund plan, revising an existing plan or replacing a plan that has completed its 10-year period. Existing plans do not need immediate conversion until they are revised or replaced.
