What is a capital works fund, and how much should yours hold?
By The stratai team
Ask a roomful of owners what their levies pay for and most will picture the day-to-day: cleaning, insurance, the gardener, power for the common areas. Far fewer can tell you what their capital works fund holds, or why it matters. Yet that fund is often the single biggest financial decision a building makes, and getting it wrong is what turns a routine repair into a painful special levy.
This guide explains what the capital works fund is, what it pays for, and how to think about the right balance, in plain English and without the jargon.
Two funds, two jobs
Most strata schemes run two funds. The administrative fund covers the recurring, everyday cost of running the building, the kind of expense that turns up every quarter. The capital works fund, still widely called the sinking fund, is for the large and less frequent jobs: replacing a roof, repainting the building, resurfacing the driveway, or upgrading a lift.
The simplest way to tell them apart is to ask how often the expense recurs. If it lands every quarter, it belongs in the administrative fund. If it lands once a decade but costs a fortune when it does, it belongs in the capital works fund.
What the capital works fund pays for
Typical capital works fund expenses include the kind of big-ticket items that are easy to forget until they arrive:
- Roof replacement and major waterproofing
- Repainting the exterior and common areas
- Lift replacement or major upgrade
- Driveway and car park resurfacing
- Replacing common-property fixtures like fencing, pumps, or balustrades
How much should the fund hold?
There is no single number that fits every building, and the rules differ between states, so always check what applies to your scheme. The principle, though, is the same everywhere: the fund should hold enough that the predictable big jobs can be paid for without a sudden special levy.
The tool that answers the question is a capital works fund plan, sometimes called a maintenance plan or forecast. A good plan looks ten or more years ahead, lists the major works the building will face, estimates what each will cost and when, and works backwards to the contribution owners should be making now. With a plan in place, the right balance stops being a guess and becomes a schedule.
Why under-funding is a false economy
It is tempting to keep levies low by keeping the capital works fund lean. Owners rarely complain about a small bill. The problem is that the work does not go away, it just waits, and an empty fund means the building has to raise the money the hard way when the roof finally fails.
That usually means a special levy, an unexpected and often large bill that every owner has to pay at once. Special levies are where strata disputes are born. They also make units harder to sell, because a well-funded building is a visible sign that the scheme is run well.
Keeping owners on side
Owners are far more willing to fund the capital works fund when they can see where the money goes. The buildings that avoid special-levy shocks tend to share three habits: they keep a current forecast of major works, they review it every year, and they make the plan and the fund balance easy for owners to see.
That last habit is the one most schemes get wrong. When the plan lives in a file only the manager can open, owners have to take the contribution on trust. When the plan and the balance are visible to everyone, the contribution stops being a mystery and starts being an obviously sensible decision.
Where stratai fits
stratai keeps capital plans and the works behind them in one place that managers and owners can both see. The plan is not a document buried in a drive, it is a live view of what is coming, what it will cost, and where the fund stands. That shared visibility is what turns a contribution owners resent into one they understand.
If your buildings are still tracking capital works in a spreadsheet, a walkthrough is the fastest way to see the difference. Book a demo and we will show you on a portfolio like yours.