Capital Works Funds for Strata: A Plain-English Planning Guide
Every strata building wears out. Roofs age, membranes fail, lifts need replacing, facades need repainting, and concrete eventually needs repair. The capital works fund is how a strata scheme pays for all of that without hitting owners with a frightening bill the moment something major breaks. Get it right, and big expenses are planned for and quietly funded over years. Get it wrong, and the owners corporation lurches from one emergency special levy to the next, with the building deteriorating in between.
If you sit on a strata committee, manage a scheme, or own a lot and want to understand where your levies actually go, this guide explains the capital works fund in plain English. It covers what the fund is, what it pays for, the 10-year plan the law requires, the significant changes that arrived with the 2026 NSW reforms, and the single thing that most often makes the difference between a plan that works and one that leaves a scheme exposed.
This guide is general information about how capital works funds work in NSW. It is not legal or financial advice, and for decisions specific to your scheme you should consult a strata lawyer, your strata managing agent, or a qualified professional.
The two funds every strata scheme runs
A NSW owners corporation runs its money through two separate funds, and understanding the split is the key to the whole topic.
The administrative fund covers the day-to-day, recurrent running costs of the building: cleaning, gardening, insurance premiums, electricity for common areas, and minor routine repairs. Think of it as the scheme's everyday operating account.
The capital works fund, formerly known as the sinking fund, is the scheme's long-term savings account. It exists to pay for major, infrequent, capital expenses, the big-ticket items that come around every several years or decades rather than every month. The whole point is to accumulate money steadily over time so that when a large cost arrives, the money is already there.
Keeping the two separate matters because they answer different questions. The administrative fund asks "what does it cost to run the building this year?" The capital works fund asks "what will it cost to keep this building standing for the next decade and beyond, and are we putting enough aside now to be ready?"
What the capital works fund actually pays for
The capital works fund is for significant, non-recurrent work on common property. In a typical strata building that includes:
Repainting the building exterior and common areas, usually every seven to ten years.
Replacing or repairing the roof and waterproofing membranes.
Lift replacement, modernisation or major servicing.
Fire safety system upgrades.
Concrete repairs, including concrete spalling and concrete cancer remediation.
Balcony, balustrade and facade repairs.
Plumbing, stormwater and drainage remediation.
Driveway and car park resurfacing, fencing and major landscaping renewal.
It is worth noticing how many of these are building-defect and remedial items rather than simple replacements. Waterproofing failures, concrete deterioration and facade problems are some of the largest and least predictable costs a strata scheme faces, and they are precisely the ones a generic plan tends to underestimate. That point matters a great deal later in this guide.
The 10-year capital works fund plan
Under the Strata Schemes Management Act 2015, every NSW owners corporation must prepare a 10-year capital works fund plan. This is the legal backbone of the whole system, set out in Section 80 of the Act, and it requires the scheme to forecast its anticipated major expenditure over a ten-year horizon, beginning from the first annual general meeting.
A few features of the plan are worth knowing:
It must be reviewed at least once every five years, though reviewing it annually alongside the budget is strongly recommended, because costs shift and unexpected issues arise.
The owners corporation must implement the plan "so far as practicable." There are no direct fines for failing to follow it, but, as covered below, the consequences of ignoring it are real.
For new schemes, the first plan is informed by the initial maintenance schedule the original owner (usually the developer) prepares.
A limited exemption exists for certain small two-lot schemes that meet specific criteria; almost everyone else needs a plan.
The plan also feeds directly into the financial certificate (the Section 184 certificate) provided when a lot is sold, which means a weak or underfunded plan is visible to prospective buyers and their solicitors, and can drag on sale prices across the entire scheme.
What changed in 2026: the new NSW rules
The strata landscape shifted with the Strata Schemes Legislation Amendment Act 2025, which brought major capital-works reforms into effect from 1 April 2026. If your committee has not caught up with these, now is the time.
A mandatory standard form. All new or revised 10-year capital works fund plans must now be prepared using a prescribed standard form issued by NSW Fair Trading, in a digital format, rather than the inconsistent, variable plans schemes used to rely on. Schemes with a current plan do not have to redo it immediately, but must use the new form at their next review.
A digital Capital Works Fund Planner. NSW has introduced a planner tool inside the Strata Hub portal to help committees and managers prepare compliant plans, with prefilled information to make reviews easier.
Earlier developer forecasts. For new buildings, the original owner must now obtain a compliant 10-year forecast before the first AGM and include it in the proposed budget, so owners start with realistic levy contributions rather than an optimistic guess corrected later.
Sustainability included. Capital works estimates must now account for sustainability infrastructure, broadening what the plan has to anticipate.
A longer claims window. The limitation period for certain owner claims has been extended from two years to six years, which raises the stakes for owners corporations that neglect maintenance and let avoidable damage spread.
The common thread across these reforms is a push toward realistic, accountable, forward-looking planning, with NSW Fair Trading gaining far greater digital visibility through Strata Hub into which schemes are actually compliant.
How the fund is paid for, and the special-levy trap
The capital works fund is built up through levies, the contributions owners pay, which are generally allocated according to each lot's unit entitlement. The owners corporation estimates what it needs to raise, sets the contributions, and collects them, typically quarterly.
The system the law is trying to encourage is proactive funding: contribute steadily over the years so the money is ready when major works are due. The alternative, which the capital works fund concept was specifically created to prevent, is reactive funding through special levies, one-off charges raised in a hurry when the fund cannot cover an unexpected bill.
Special levies are painful for two reasons. First, they can be large, running into tens of thousands of dollars per lot for major remediation, landing on owners with little warning. Second, they are unfair across time. When a scheme underfunds for years and then hits owners with a special levy, the people who benefited from the building's components over that period have often sold and moved on, leaving the current owners to foot a bill that should have been shared across everyone who used the building. A well-funded plan spreads major costs fairly across the years and the owners who actually benefit from them.
Why a plan is only as good as the building behind it
Here is the part that most determines whether a capital works plan actually protects a scheme, and it is the part generic plans get wrong.
A capital works plan is a forecast, and a forecast is only as reliable as the information it is built on. A plan that assumes a building is in average condition, and simply applies standard replacement intervals, will badly mislead a committee if that building has problems the assumptions never accounted for. Active water ingress, concrete cancer beginning in the balconies, a facade nearing the end of its life, a membrane that is failing years ahead of schedule: these are exactly the costs that blow a fund apart, and exactly the ones a desktop forecast cannot see.
This is why, for older buildings or those with complex issues, the NSW Government itself recommends involving a building consultant to help identify future maintenance needs, alongside the quantity surveyor who prepares the cost forecast. A condition assessment by an engineer or building consultant turns a generic plan into a realistic one. It identifies what is actually deteriorating, how urgent it is, and roughly what it will cost to put right, so those figures can be built into the plan before they become a crisis and a special levy.
Put simply: the quantity surveyor knows what things cost to replace; the building consultant knows what your specific building actually needs and when. A strong plan uses both. A plan that skips the building knowledge is guessing, and in a scheme with waterproofing, concrete or facade issues, it is usually guessing low. Our guides to water ingress and concrete cancer show just how quickly those particular costs escalate when they are not planned for.
Who does what
A good capital works plan is usually a small team effort, and it helps to know who contributes what:
A quantity surveyor or registered valuer typically prepares the formal cost forecast that complies with the standard form.
A building consultant or remedial engineer provides the condition assessment and identifies the building's specific maintenance and remedial needs, especially for ageing or complex buildings, so the forecast reflects reality.
The strata managing agent coordinates the process, integrates the plan into annual budgets and levies, and keeps it current in Strata Hub.
A strata lawyer can advise on compliance obligations where there is any doubt.
The committee's job is to make sure these pieces actually talk to each other, so the plan is both compliant and genuinely informed by the building's condition.
Red flags that a scheme is underplanning
It is worth checking whether your scheme shows any of these warning signs:
The capital works fund is low, or has needed special levies in the recent past.
The 10-year plan has not been reviewed in the last two or three years.
The plan was prepared as a desktop exercise with no inspection of the building.
Known problems, a recurring leak, cracking concrete, a tired facade, do not appear anywhere in the forecast.
The plan still uses an old, non-standard format and has not been brought into line with the current requirements.
Any of these suggests the plan may not reflect what the building will actually cost to maintain, which is the situation that produces nasty surprises.
When to get a building assessment for your plan
It is worth commissioning a professional condition assessment to inform your capital works plan when:
Your building is more than about ten years old, or has known or suspected defects.
The scheme is due to review or replace its 10-year plan.
You have visible issues, leaks, cracking, spalling concrete, balcony or facade problems, that should be costed and scheduled.
A previous plan was prepared without anyone actually inspecting the building.
The committee wants to fund proactively and avoid special levies rather than react to them.
The earlier real building conditions are built into the plan, the more smoothly and fairly the scheme can fund the work that is genuinely coming.
Frequently asked questions
What is a capital works fund in strata? It is the fund a NSW owners corporation uses to pay for major, infrequent work on common property, such as repainting, roof and membrane replacement, lift upgrades and concrete repairs. It was formerly called the sinking fund, and it is separate from the administrative fund, which covers day-to-day running costs.
What is the difference between the administrative fund and the capital works fund? The administrative fund covers recurrent, day-to-day costs like cleaning, insurance and minor repairs. The capital works fund is a long-term savings account for major capital expenses that arise every several years or decades. They are kept separate and budgeted for separately.
Is a 10-year capital works fund plan compulsory in NSW? Yes. Under Section 80 of the Strata Schemes Management Act 2015, owners corporations must prepare a 10-year capital works fund plan and review it at least every five years, with limited exemptions for certain two-lot schemes. Since 1 April 2026, new and revised plans must use a mandatory standard form.
What changed for capital works funds in 2026? The Strata Schemes Legislation Amendment Act 2025 introduced, from 1 April 2026, a mandatory standard-form plan prepared digitally through Strata Hub, earlier compliant forecasts from developers before the first AGM, the inclusion of sustainability infrastructure, and an extension of certain owner claim limitation periods from two years to six years.
What is a special levy and how do I avoid one? A special levy is a one-off charge raised when the fund cannot cover an unexpected major cost, and it can run into tens of thousands of dollars per lot. The way to avoid them is proactive funding: a realistic 10-year plan, informed by the building's actual condition, that builds up the fund steadily before major works fall due.
Who should prepare our capital works plan? Typically a quantity surveyor or registered valuer prepares the cost forecast, while a building consultant or remedial engineer provides the condition assessment for older or complex buildings, and the strata managing agent coordinates it. For anything legally uncertain, a strata lawyer can advise.
Make sure your plan is built on what your building actually needs
A capital works fund only protects a scheme if the plan behind it reflects the real condition of the building. The most expensive planning mistake in strata is a forecast that looks tidy on paper but never accounted for the leak, the spalling concrete or the ageing facade that was always going to need attention, because that gap is what becomes a sudden special levy.
Assentra is a registered building consultancy and remedial engineering practice that helps owners corporations understand the true condition of their buildings and the works genuinely coming, so that condition can be built into a realistic capital works plan. Learn more about our capital works planning support or get in touch for a building condition assessment to give your scheme a plan grounded in what your building actually needs, not what a template assumes.