Can our body corporate skip making sinking fund contributions?
In this month’s Strata Q&A, we received a question from Mira & Kiran from Queensland, who are concerned about the way their strata committee is handling levy contributions and managing their funds.
Q. Can our body corporate skip regular sinking fund contributions and just raise special levies when something needs fixing?
Our body corporate only collects levies for the Administrative Fund and doesn’t raise regular contributions to the Sinking Fund — they say it helps “keep levies cheap.” Instead, money for repairs and maintenance gets raised through special levies whenever something comes up.
Lately, we’ve had two big special levies for fairly predictable maintenance jobs, and the building’s starting to look a bit run down. Is this a normal way to handle strata maintenance and budgeting, or should we be planning differently? What can I do to make sure our body corporate is properly funding long-term upkeep?
A. No. Without proper contributions, lot owners are left exposed to large, unexpected special levies to pay for predictable maintenance
If your body corporate is only raising levies for the administrative fund and neglecting the sinking fund, it’s not just poor practice, it’s also contrary to Queensland strata legislation. The sinking fund (also known as the capital or reserve fund) is essential for covering major repairs, replacements, and capital improvements to common property over time.
Without proper contributions, lot owners are left exposed to large, unexpected special levies to pay for predictable maintenance, exactly what you’re experiencing. This approach might seem to “keep levies cheap,” but it creates serious financial strain in the long run and can allow the building to deteriorate.
You and other owners can take proactive steps to get the sinking fund back on track:
Put a motion on the agenda for the next body corporate meeting requesting that a sinking fund budget and forecast be prepared and presented for approval.
A proper sinking fund forecast looks ahead 10 years or more, estimating the cost of major works such as roof repairs, painting, and driveway resurfacing.
Queensland’s body corporate legislation requires every scheme to maintain a sinking fund forecast. If your scheme isn’t preparing or following one, request that they do.
If the committee or strata manager is unwilling, owners can engage an external professional to prepare the forecast. This becomes the foundation for setting realistic sinking fund levies.
If your body corporate committee or manager resists, contact the Queensland Office of the Commissioner for Body Corporate and Community Management (BCCM). The BCCM can provide guidance, dispute resolution, or enforcement where a body corporate is failing to meet its funding obligations.
If non-compliance continues, you can escalate the matter to the Queensland Civil and Administrative Tribunal (QCAT), which has the authority to order the body corporate to properly fund and maintain the sinking fund.
Maintaining a healthy sinking fund isn’t just a legal requirement. It is vital for protecting your investment, preserving property value, and avoiding costly special levies down the track. A well-managed fund ensures your building stays in good condition and owners aren’t caught off guard by major expenses.
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