What’s the Link Between Strata Special Levies and the Sinking Fund?

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Sinking fund, special levies, capital works fund and the administrative fund – it can feel like there are so many names and payment types to get familiar with when living in strata. We’re here to clear up your questions. Today, let’s explore the common question about the strata special levy vs sinking fund.

First up  – and just to throw another term into the mix – the sinking fund had somewhat of a rebrand in 2017 and is now known as the capital works fund for NSW strata schemes. A capital works fund fee or levy (previously sinking fund levy) covers major strata expenses that are generally planned ahead of time. In fact, your NSW strata scheme is legally required to have a 10-year capital fund plan in place at all times to anticipate major expenditure for the property.

The other aspect of your regular strata fees goes towards the administrative fund, which covers everyday expenses such as gardening, cleaning and insurance premiums for common property.

So – what’s the link between the capital works fund (previously sinking fund) and special levies? In the case where unplanned expenditure arises and can’t be covered by the capital works fund, a special levy could be voted in by a minimum 75%, or special resolution of the owners corporation. If voted in, a special levy is an extra shared cost to owners that’s deemed separate to regular strata levies.

A special levy can also be passed for any large and planned one-off strata expenses if agreed to by special resolution; for example, renovating the foyer or redesigning a garden area.

How a good capital fund plan can minimise special levies

Here’s where the link between the capital works fund and special levies really becomes clear. While unplanned expenses can always pop up in a property, in many cases special levies can be minimised with an effective and proactive 10 year capital fund plan in place. If your strata manager or strata committee is looking ahead of time at the foreseeable needs of the strata scheme, then they’ll be scheduling in major expenses into your regular levies. This could make all the difference between a slight difference over time or a spike in expenses, which can be more difficult to manage for many strata owners. This is just one of the ways that a great strata manager can provide value for you and other owners within your strata scheme.

Here at Jamesons Strata Management we’re passionate about providing proactive support and services for our strata clients, from providing COVID-19 guidance through to planning ahead for major works. If you’ve been thinking about changing your strata manager, the process is simple.

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