At a Glance
The capital works fund (previously called the sinking fund) is your strata scheme’s savings plan for major future repairs and maintenance.
Every NSW strata scheme is legally required to have a 10-year capital works fund plan and to review it at least every five years.
From 1 April 2026, reviewed or replaced plans must use a new government-prescribed standard form.
A healthy, well-managed fund is one of the best protections against unexpected special levies.
If you are buying into strata, checking the fund’s health before you commit could save you significantly.
Your Building’s Long-Term Financial Safety Net
If you have ever received a large, unexpected special levy notice or heard of someone who has, you will understand why the capital works fund matters so much. It exists precisely to prevent that kind of financial shock.
Yet for many lot owners, the capital works fund remains one of the least understood parts of strata living. What is it? What does it cover? And with new changes that took effect in April 2026, does your plan need updating?
Here is everything you need to know.
What Is the Capital Works Fund?
When you own a lot in a strata scheme, your regular levy payments contribute to two separate funds. The administration fund covers the day-to-day running costs of the building; things like electricity and cleaning in common areas, pest control, building insurance premiums, and strata management fees.
The capital works fund is different. It’s a longer-term savings pool specifically set aside for major works and significant repairs to common property. Think of it as the building’s financial safety net for the big-ticket items that every building will eventually need.
You may have heard it called the ‘sinking fund’ The capital works fund was previously known as the sinking fund before NSW strata legislation was updated in 2015. The two terms refer to the same thing, if you see ‘sinking fund’ in older documents or on a Section 184 Certificate, it’s the same fund under a different name. |
What Does It Actually Cover?
The capital works fund is intended for major capital expenditure items that are too large or infrequent to be covered by day-to-day administration levies. Common examples include:
- Roof replacement or major repairs
- Lift and elevator overhauls or replacements
- External painting and facade works
- Driveway and carpark resurfacing
- Pool equipment replacement
- Replacement of common area floor coverings, such as carpet or tiles
- Fencing and boundary works
- Major waterproofing works to balconies or wet areas
- Generator or electrical switchboard replacement
Any significant works like these will generally need to be approved through a passed motion at your Annual General Meeting or an Extraordinary General Meeting.
What Is the 10-Year Capital Works Fund Plan?
It is not enough to simply have a fund. NSW law requires every strata scheme to also maintain a 10-year capital works fund plan. This is a forward-looking document that maps out what major works the scheme anticipates over the next decade and estimates what those works will cost.
The plan must be reviewed at least every five years, and any new or reviewed plan must be approved at an Annual General Meeting.
Think of it as a financial roadmap. A good plan tells your committee, and your fellow owners, what is coming, when it is likely to be needed, and how much the scheme needs to be setting aside each year to be ready for it.
| New from 1 April 2026: When an owners corporation prepares a new 10-year plan or reviews and replaces an existing one, it must use a new NSW Government standard form. The form must be used exactly as prescribed, it cannot be modified. |
The new standard form requires detailed year-by-year cost projections across a comprehensive range of categories; structural elements, mechanical systems, electrical systems, fire safety, plumbing, building fabric, landscaping, and more. It also requires a fund balance summary showing opening balances, levy contributions, interest earned and closing balances for each year of the plan.
A useful tip from the new standard form The new form encourages schemes to budget for long-life capital items, such as lifts or generators, even when their replacement falls outside the current 10-year window. Including these items now, even as an estimate, helps avoid the financial pressure of a large special levy when that work eventually becomes necessary. |
Why Is a Healthy Fund So Important for Owners?
The capital works fund directly affects your levies and your financial exposure as an owner, both now and in the future.
A scheme with a well-funded capital works reserve is in a much stronger position to handle major repairs as they arise. When the fund is healthy, the committee can approve necessary works without needing to raise additional money at short notice.
When the fund is underfunded or the plan has noy been properly maintained the consequences can be significant:
- A special levy may be raised, requiring owners to pay a lump sum at short notice. These can run into thousands, or in some cases tens of thousands, of dollars per lot.
- The scheme may need to take out a loan to fund urgent works, adding interest costs that ultimately come back to owners through levies.
- Necessary maintenance may be deferred, causing the building to deteriorate and the eventual repair bill to grow.
If an underfunded plan is identified early, it can usually be addressed gradually through incremental levy increases over time, which is far less disruptive than a large special levy arriving at short notice.
What Happens When the Fund Runs Low?
Capital works funds can become depleted for a range of reasons. Sometimes the plan hasn’t kept pace with the age or condition of the building. Sometimes major works have been needed ahead of schedule. And sometimes, historically, funds simply were not contributed to at adequate levels.
If the fund is running low and significant works are required, the owners corporation generally has a few options though each needs to be approved by a vote of owners:
- Raise a special levy to cover the upcoming costs — a one-off charge to all owners.
- Apply for a strata loan to fund the works, repaid through levies over time.
- Apply for applicable government rebates, in cases where these are available (for example, certain sustainability upgrades).
None of these options are ideal, which is exactly why maintaining an accurate, forward-looking capital works fund plan matters so much. Prevention is always less painful than the cure.
Does Your Plan Need Updating?
Here are some questions worth raising with your strata manager:
- When was your scheme’s 10-year capital works fund plan last reviewed or replaced?
- Has it been in place for close to five years, or longer?
- Does it reflect the current age and condition of your building’s key assets?
- Has your scheme recently completed major works that will affect future planning?
- Are there big-ticket items like lifts, roof, facade that haven’t been budgeted for beyond the current 10-year window?
If you’re not sure of the answers, your strata manager can check the status of your plan and advise on whether a review is needed. If your plan is due for review on or after 1 April 2026, your manager will ensure the new standard form is used.
Why It Matters When You’re Buying
If you’re considering purchasing a strata property, the health of the capital works fund is one of the most important things to check before you commit.
A Section 184 Certificate. the financial snapshot document issued by the owners corporation, will show you the current balance of the capital works fund, any special levies that have been raised or approved, and the scheme’s overall financial position. Your solicitor or conveyancer should request this as standard.
It may seem counterintuitive, but an older building with a healthy, well-maintained capital works fund can be a safer financial proposition than a newer building with a minimal fund. A strong fund balance tells you the scheme has been managed responsibly and that the building’s future maintenance needs have been planned for.
Conversely, a very low capital works fund balance, particularly in an older building with significant common property, should prompt careful consideration and further questions before you proceed.
Frequently Asked Questions
Is the capital works fund the same as the sinking fund?
Yes. The capital works fund was renamed from ‘sinking fund’ when NSW strata legislation was updated in 2015. If you see either term in documents or on a Section 184 Certificate, they refer to the same fund.
How often does the 10-year plan need to be reviewed?
Under NSW law, the plan must be reviewed at least every five years. However, it’s good practice to review it more regularly — particularly after major works are completed, if the building’s condition changes significantly, or if the scheme’s financial position shifts.
Does my scheme need to switch to the new standard form right now?
Only if your plan is currently being prepared or replaced. Schemes with an existing plan in place that isn’t yet due for replacement are not required to adopt the new form immediately. When your plan is next reviewed or replaced on or after 1 April 2026, the new form must be used.
Who prepares the capital works fund plan?
The plan can be prepared by a strata managing agent, the secretary or treasurer of the strata scheme, a committee member, or an engaged independent expert such as a quantity surveyor. For larger or more complex buildings, Jamesons recommends engaging an independent expert to ensure the plan is robust and reliable.
What if my scheme has a low capital works fund balance?
It’s better to know about it early. An underfunded plan can usually be addressed gradually through incremental levy increases over time — which is much less disruptive than a large special levy. Speak to your strata manager about your options.
Can I see my scheme's capital works fund plan?
Yes. As a lot owner, you’re entitled to request access to your scheme’s financial records, including the capital works fund plan. Contact your strata manager to obtain a copy.
What's the difference between the capital works fund and the administration fund?
The administration fund covers day-to-day running costs — insurance, management fees, routine maintenance and common area expenses. The capital works fund is specifically for major future expenditure on common property — big-ticket repairs and replacements that occur infrequently but cost significantly more.
