Capital Works Fund Guide

First published: 1 March 2026 · Last updated: 2 June 2026

What is the capital works fund?

Under Section 80 of the Strata Schemes Management Act 2015 (SSMA), every Owners Corporation must establish a capital works fund — a dedicated pool of money to cover anticipated major expenses on common property. This is separate from the administrative fund, which covers day-to-day operating costs.

The capital works fund exists to ensure that when significant maintenance or replacement work is needed — painting the building exterior, replacing the roof membrane, upgrading the fire system, or resurfacing the car park — the money is already there. Without it, the OC faces special levies that can run into tens of thousands of dollars per lot owner.

The 10-year plan

Section 80 requires the Owners Corporation to prepare a 10-year capital works fund plan detailing anticipated major expenditure. The plan must be prepared for the first AGM and cover a rolling 10-year horizon from that point.

A 10-year plan is required for all strata schemes, with limited exceptions for certain two-lot schemes that meet specific exemption criteria.

What the plan should cover

The plan should identify all anticipated major works over the next decade, with estimated costs and timing. For a typical North Shore boutique building, this commonly includes exterior and common area repainting (typically every 7–10 years), roof and waterproofing membrane replacement, lift modernisation or major servicing, fire safety system upgrades, plumbing and drainage remediation, balcony and balustrade repairs, driveway and car park resurfacing, and fencing and landscaping renewal.

Review requirements

The plan must be reviewed at least once every 5 years, but the OC can review, revise, or replace it at any general meeting by ordinary resolution. In practice, committees should be reviewing the plan annually alongside the budget — costs change, timelines shift, and unexpected issues arise.

The 1 April 2026 reforms — what changed and why

On 1 April 2026, the NSW Government amended the strata regulations, introducing the most significant change to capital works planning in a decade. Every 10-year capital works fund plan that is newly prepared, reviewed or replaced from that date must now follow a new prescribed standard form. Plans dated before 1 April 2026 remain valid until their next review point — but the moment your plan is due for its five-yearly review, the new format applies.

The reforms were designed to make plans more consistent, more forward-looking, and easier for committees and lot owners to understand. Four changes matter most.

A mandatory standard form. Plans used to vary widely in format and depth depending on who prepared them. The new standard form sets a consistent structure, so a committee — or a prospective buyer's solicitor — can compare plans on a like-for-like basis.

Life-cycle costing of each major element. Costs must now be built up element by element — roof, waterproofing, facade, services, fire systems, common-area finishes — based on the condition and expected life of your actual building, rather than generic industry-average tables. This rewards plans grounded in a real inspection of the property.

Sustainability inclusions. Plans must now consider measures such as EV charging infrastructure, solar, energy efficiency and water. Planning for these early avoids scrambling for special levies later.

A climate resilience assessment. Plans must account for climate-related risks to the building — drainage, salt exposure and thermal performance among them. For coastal and harbour-facing buildings, this matters: salt and water exposure materially shorten the life of many building elements.

Together, these changes shift the plan from a desk-based financial forecast toward an assessment genuinely tied to the building in front of you.

The 5-year review cycle — is your plan due?

The SSMA requires the capital works fund plan to be reviewed at least once every five years. That cycle is the simplest way to work out where your scheme stands.

If your current plan was prepared within the last five years and hasn't reached its review point, it remains compliant under the rules that applied when it was made — though you may choose to move onto the new standard form sooner, particularly if major works are coming up. If your plan is at or past its five-year review point, it is due now, and any new plan must use the 2026 standard form. And if you have no plan in place, your scheme is required to prepare one (with the limited two-lot exception below), on the new form.

A useful rule of thumb: a plan with five or more years of usable life remaining can often be refreshed rather than rebuilt from scratch — faster and less costly. A plan at end-of-life generally needs a full rebuild.

Small strata schemes and the 2-lot exemption

Not every strata scheme needs a 10-year plan. Schemes of three or more lots are required to have one. Certain two-lot schemes, however, may be legally exempt.

A two-lot scheme can be exempt if all three of these are true: the buildings are physically detached from one another; there are no buildings (or parts of buildings) situated outside the two lots; and the owners pass a unanimous resolution to dispense with the plan.

If your two-lot scheme meets these conditions, you may not need a plan at all. If it doesn't — for example, the two dwellings share a common wall, or there is a shared structure such as a carport or retaining wall outside the lots — the requirement still applies. Two-lot schemes are often the most uncertain about their obligations, so it is worth confirming whether you qualify before committing to anything.

How a 2026-compliant plan should be structured

A plan prepared on the new standard form should, at a minimum, set out: a schedule of every major common-property element with its current condition and expected remaining life; the estimated cost and timing of each future work, built up element by element rather than from generic averages; the sustainability inclusions the scheme should plan for, and when; a climate resilience assessment relevant to the building's location and exposure; a year-by-year forecast of the fund balance and the levy contributions needed to keep it solvent across the 10-year horizon; and a plain-English summary the committee can present and lot owners can understand.

The detail behind these elements is where an on-site inspection earns its keep: condition and remaining life can only be judged accurately by examining the building, not by reading documents.

How levies are calculated

At each AGM, the Owners Corporation must determine contributions (levies) from lot owners to fund the capital works plan. The calculation is straightforward in principle: take the total anticipated expenditure across the plan period, account for what's already in the fund, and divide the shortfall across the remaining years and lot entitlements.

The challenge is getting the estimates right. Underestimating costs — or deferring maintenance that then escalates — leads to underfunded plans and eventual special levies. Overestimating creates unnecessarily high quarterly levies that frustrate lot owners.

This is where regular building inspections pay for themselves. A clear picture of what actually needs attention — and when — leads to accurate budgeting and fair levies.

The real cost of deferred maintenance

The most expensive decision a committee can make is to defer maintenance. A minor gutter repair deferred becomes water ingress, which becomes internal damage, which becomes a structural remediation project costing ten times the original fix.

This pattern is especially common in self-managed buildings on the North Shore, where committees may lack the technical knowledge to assess urgency, or may face resistance from lot owners who see levies as an unnecessary cost. The capital works fund exists precisely to prevent these escalation cycles.

Impact on property values

Prospective buyers and their solicitors increasingly scrutinise strata records before purchase. A well-funded capital works plan signals a well-managed building. A depleted fund — or a history of special levies — raises red flags and can materially affect sale prices across the scheme.

Getting professional input

While the legislation doesn't mandate professional quantity surveyor reports for all schemes, they're strongly recommended for buildings over 10 years old or with complex construction. A quantity surveyor can provide independent cost estimates for major works, helping the committee set realistic levies and avoid surprises.

For smaller boutique buildings, a structured maintenance inspection — identifying what needs attention now, what's coming in 2–5 years, and what's further out — can provide enough detail to prepare a credible plan without the cost of a full quantity survey.

What this means for your committee

A well-prepared capital works fund plan protects the committee, the lot owners, and the building itself. It demonstrates financial responsibility, supports informed decision-making at AGMs, and — critically — helps avoid the special levies that create friction and financial hardship within a scheme.

The upcoming April 2026 standard form requirements are a good prompt to review your current plan. If it hasn't been updated in the last 2–3 years, now is the time.

What your committee should do now

The reforms are a natural prompt to check where your scheme stands. First, find the date of your current plan — if it is approaching or past its five-year review, start planning for a refresh or rebuild on the new form. Second, if you are a two-lot scheme, confirm whether you qualify for the exemption before commissioning anything. Third, when you are ready, choose a preparer who will actually inspect the building.

Our 10-Year Capital Works Fund Plan service prepares a compliant plan on the 2026 standard form — built from a personal on-site inspection, with transparent published pricing from $1,295+GST.

Disclaimer: This guide provides general information about capital works fund obligations under NSW strata law. It is not financial or legal advice. For specific questions, consult a strata lawyer or qualified quantity surveyor.