Setting Realistic Budgets for Self-Managed Schemes
Managing a self-managed strata or community scheme has plenty of rewards for close-knit communities. But when it comes to finances, things can get tricky. A realistic budget is more than just numbers on a page. It keeps your property maintained, ensures legal compliance, and prevents nasty surprises.
This guide breaks down the steps for preparing and maintaining a budget that works:
Why Budgets Matter
Legal compliance schemes are required under the legislation to maintain both an administrative fund and a capital works fund in order to maintain and repair the common property.
Property value A well-maintained property holds and increases its value.
Fairness Contributions are collected based on unit entitlement, so every owner pays their required share.
Peace of mind With funds set aside, you won’t face sudden special levies or emergencies.
Step 1. Review The Previous Budgets
Look back at last year’s numbers:
Which costs come up every year (insurance, cleaning, gardening)?
Which were one-off repairs?
Did actual spending match the budget?
This gives you a baseline for planning the new year. If in doubt create a list. If you do not have a budget look at the expenses incurred in previous years.
Step 2. Identify Fixed and Variable Expenses
Fixed expenses: predictable, recurring costs
Insurance premiums
Utility bills
Fire safety servicing
Cleaning & gardening
Strata management fees (if any)
Variable expenses: less predictable, can change year to year
Plumbing repairs
Electrical issues
Landscaping upgrades
Roofing repairs
Tip: Keep a small buffer for the “unknowns”
Step 3. Prioritise Essential Expenses
Certain items must always come first:
Insurance (mandatory by law)
Fire safety compliance
Cleaning and gardening of common property
Utilities for common areas
Administration (audit, accounting, secretarial costs)
Step 4. Budget for Routine Maintenance
Small, regular jobs will prevent big, costly repairs.
Examples:
Cleaning your gutters before storm season
Regular lift servicing
Carpet cleaning
Pest control and inspections
Pumps and pits cleaned and serviced
Step 5. Plan for Major Works, Don’t Delay Saving
Big-ticket items (roofing overhauls, window replacements, waterproofing, painting) are unavoidable. These belong in the capital works fund/sinking fund.
Warning: Cutting levies now might feel good in the short term, but it will mean much higher levies later when urgent works can’t be delayed.
Key actions:
Review your 10-year capital works plan.
Set realistic annual contributions.
Adjust yearly for inflation and the building’s age.
Keep funds invested securely (e.g. term deposits), interest does add up over time.
Step 6. Calculate Contributions by Unit Entitlement
The law requires that levies are based on unit entitlement, not just “splitting evenly.” This ensures fairness and avoids disputes. To get the Unit Entitlement look at your strata plan.
Step 7. Communicate and Collaborate
Share the draft budget with all owners.
Discuss priorities openly at your Annual General Meeting or beforehand to make the meeting run smoothly.
Explain why certain contributions are needed owners are more likely to support levies when they understand the purpose. Levies are an owners share of keeping their investment safe and secure, they are not just another expense.
Step 8. Seek Expert Help When Needed
Even self-managed schemes sometimes need outside help.
Consider:
Accountants for financial planning
Strata lawyers for legal compliance
Consultants for capital works planning
Insurance brokers for getting the best product
Strata Managers for guidance, impartial advice and where to get that specialist help
Common Pitfalls to Avoid
Reducing levies to “keep owners happy” (leads to future cash crises)
Forgetting to allow for inflation and rising trade costs
Ignoring the capital works fund plan
Patch repairs rather than permanent solutions, pay cheap pay twice
Relying on special levies for predictable repairs
Quick Checklist for a Strong Budget
Covers all fixed and variable expenses
Includes both administrative and capital works funds
Contributions set fairly by unit entitlement
Reserves built steadily for major works
Reviewed and updated annually
Shared openly with all owners
Final Word
Budgeting in strata and community isn’t just about numbers it’s about protecting your property, your investment, and your community. Self-managed schemes can succeed with budgets that are realistic, transparent, and forward-looking. Start early, save steadily, and remember, don’t delay putting aside funds for the big stuff. Not having a good budget can result in expensive emergencies, lower property values, legal risks and unhappy owners.
Disclaimer:
This article is intended for general educational purposes only and does not constitute legal or financial advice. Readers should seek independent legal and professional guidance relevant to their specific circumstances and jurisdiction.