Budgeting capital works for your property

Budgeting capital works for your property

Table of Contents

In many situations most Owners Corporation have not adequately maintained their investment, primarily due to poor funding. As a result, this will likely affect the sale value of the lots and increase the risk of requiring large special levies when the works can no longer be ignored.


As Melbourne’s leading building consultants, Mabi Services have outlined the benefits of implementing a capital works fund and maintenance plan.

Why some property’s do not budget for capital works

The main reason is simply, in many instances, having the owners invest their money into an account they do not control, and when it is not mandatory for the owners to invest their funds over time can be very difficult. The result being that property maintenance decisions are made reactively rather than proactively.

Recent changes to the Owners Corporation legislation now require strata developments with 51 lots or more must have a maintenance plan for their site. This is a positive step forward for the industry, however many properties with less than 51 lots still require funding for major works such as passenger lifts, roof replacement, external painting and other plant and equipment.

Why your property should consider implementing a maintenance plan

All properties, regardless of their size will require repairs, maintenance and long-term replacement of capital items. This could be items such as replacing fencing, repairs and replacement of concrete paths, repairs and painting, roof refurbishments and gutter replacement. These are typical on many standard smaller developments.

Strata development that are less than 51 lots in size, may also have common property major infrastructure such as a passenger lifts, fire detection, sprinklers, mechanical ventilation, security systems, hydraulic services as well as internal finishes such as painting and carpet. These types of works can exceed hundreds of thousands of dollars when their effective life cycle ends, and replacement is due.

Typically, between the building age of 15-25 years many of these major cost’s cycles will fall due, and quite often the funding of these works falls on the current lot owners and not the previous lot owners.

It is a fairer system

All owners and committee members should be reminded that one of the primary roles of the Owners Corporation and its functions is to repair and maintain the common property and must act in good faith and exercise care and due diligence. Secondly, it is not unreasonable or unforeseeable that a building costs money to repair and maintain.

For example, if a person buys a unit and sells it five years later and hasn’t contributed any money towards the future maintenance, then that owner has benefited from the use of the common property with no liability as to the upcoming costs of repairs. The new owner who is yet to benefit from the use of the common property will likely be hit with a series of special levies while the Owners Corporation scrambles to recoup funds that should have been budgeted for over the previous years. A Maintenance Plan eliminates this inequality.

Saving money

Most owners are not knowledgeable in the actual costs to maintain a building. When the Owners Corporation proactively budgets to ensure sufficient funds have been allocated towards repairs and maintenance this enables works to be carried out without delay. A proactive approach to building maintenance in most cases will ensure the longevity of those building elements and can result in significant cost savings.

Other benefits

  • Long term needs of building are assessed and funded.
  • Potential problems may be identified early when plan is being prepared or reviewed.
  • Promotes a view of a well-maintained building and prudent Owners Corporation.
  • Special levy is typically not required.
  • Financial certainty for all owners.
  • Add value to your investment.
  • Promotes saleable units and liveable Owners Corporations.

Encourage owners to act

All Owners Corporations, regardless of their size should be encouraged to take action, be aware of their buildings and specific needs, and develop a maintenance plan to ensure some form of funding is in place to ensure all lot owners contribute fairly.

Encourage the following:

  • Owners to have a maintenance inspection undertaken.
  • To identify the known and potentially unknown cost cycles (the earlier the better).
  • The committee to have a “Maintenance Plan Review Meeting.”
  • The committee should ask questions and understand the plan.
  • Don’t set and forget and be proactive.
  • Review the plan and budget at least every 3-5 years.


Preparing a maintenance plan can be a fine art which requires adequate planning to ensure that the appropriate funds are allocated with the goal of eliminating the need for special levies, to avoid the collection of excessive funds. A successful budget will have progressive growth, adequate funds for the initial, short term and long-term and any future repairs and replacements. This enables all owners to know what they are up for on a yearly basis and fairly contribute for their use. The budget should be reviewed on a regular basis to keep the balance of contributions and expenditure at the right level.

For support budgeting your property’s capital works contact Mabi Services. To discuss your property’s strata management needs or receive a FREE management proposal contact our friendly team. We also offer more helpful resources and community living news in our FREE newsletter.

The information provided is a general guide only and is not intended as a substitute for legal advice. The company disclaims all responsibility and liability for any expenses, losses, damages, and costs which might be incurred as a result of the information provided by the company. This content is published in partnership with Mabi Services Pty Ltd.

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