what-is-a-capital-works-plan

What is a Capital Works Plan?

What is a Capital Works Plan?

This article provides an understanding of the different requirements for a Capital Works Plan (CWP) as compared with the Sinking Fund Assessment reports under the previous legislation.

PRE 30 NOVEMBER 2016

Under the 1996 legislation schemes were required to prepare a 10-year sinking fund plan. That is, a plan was to be obtained/prepared containing anticipated major expenditure to be met over a 10 year period.

The if, what and how the 10-year plan was implemented was not regulated. Thus, the owners corporation (OC) would decide whether to:

  1. Levy contributions in accordance with the 10-year sinking fund plan;
  2. Use the information contained within the plan to manage the common property capital works.

THE CAPITAL WORKS PLAN

The strata legislation that came into force in 2016 states that a CWP is to be prepared for each 10 year period and must be reviewed at least once every 5 years.  This is a similar requirement. What is different is that the most recent legislation 1) States that the OC is to implement the CWP as far as practicable, and 2) Details the format of the CWP which is to include:

  • details of the proposed work/maintenance (similar)
  • timing & anticipated costs of any proposed works (similar)
  • the source of funding of the proposed works (new)
  • capital fund levy
  • capital fund special levy
  • revenue from common property licenses or sales
  • other matters decided by the OC (new)
  • other matters prescribed by the Regulations (not yet addressed in the Regs).

Strata Plus has always encouraged our OCs to engage expert assistance. This is now suggested in the legislation. OCs are also encouraged to consider:

  • obtaining a new CWP that meets the legislative format requirements;
  • which capital works they plan to commence over the next 2 years; and also
  • whether they wish to obtain an asset register as part of the CWP request.

EVERY ANNUAL GENERAL MEETING (AGM)

Strata Plus’ business practice was to include each year a motion to obtain a new or updated sinking fund assessment.

The legislation now states that each year the OC must estimate how much money to credit to the fund for actual and expected spending for:

  • painting or repainting common property
  • acquiring, renewing or replacing personal property for the scheme
  • renewing or replacing common property fixtures & fittings
  • replacing or repairing common property

The OC is required to consider the CWP in determining this estimate.

Large schemes must include:

  • specific amounts for each item or matter for the next 12 months
  • a note to explain any difference between the estimates and the CWP

Strata Information Certificate

A Section 184 Certificate details specific financial and other information pertaining to a lot. The usual reason for a Certificate to be requested is for the sale of a lot. The owners corporation obligation to provide this Certificate is delegated to Strata Plus.

The Strata Schemes Management Act 2015 requires that the capital works fund contributions, the instalment dates, any amounts outstanding or in credit, is included on S184 Certificates.

If you have any questions, simply contact your Strata Plus strata manager.

The above information is contained in Sections 79 to 81 inclusive, and 184 of the Strata Schemes Management Act 2015.

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