Why capital works funds are becoming more important in NSW strata schemes.

Many strata owners only think about capital works funds when a special levy arrives.

Unfortunately, by that point, the problem is usually already expensive.

With new NSW strata reforms that commenced from 1 April 2026, capital works planning is becoming a much bigger focus across the industry. The changes are designed to improve transparency, encourage long-term planning and reduce the financial shock many owners experience when major repairs arise.

So what exactly is changing and why does it matter?

What is a capital works fund?

A capital works fund (previously known as a sinking fund) is essentially the long-term savings account for a strata scheme.

It is used to pay for major repair and replacement works to common property, including:

• roof repairs

• waterproofing

• painting

• lifts

• driveways

• fire safety systems

• common area upgrades

• facade repairs

Under NSW legislation, most strata schemes are required to have a 10-year capital works fund plan to forecast future expenditure and help determine levy contributions.

What changed in April 2026?

From 1 April 2026, all new or reviewed 10-year capital works fund plans in NSW must now use a mandatory government standard form.

The reforms are aimed at creating greater consistency across strata schemes and making it easier for owners and buyers to understand the financial position of a building.

The NSW Government has also introduced a new digital Capital Works Fund Planner through Strata Hub to help schemes prepare compliant plans.

Importantly, the reforms place greater emphasis on realistic forecasting and proper long-term maintenance planning.

Why this matters for owners

The reality is that buildings age whether owners prepare for it or not.

One of the biggest issues in strata is underfunded capital works funds. Many schemes attempt to keep levies artificially low for years, only to face large special levies later when major repairs become unavoidable.

We are increasingly seeing rising costs associated with:

• waterproofing failures

• concrete remediation

• fire compliance upgrades

• insurance requirements

• ageing infrastructure

• labour and construction inflation

Without adequate planning, these costs can place significant financial pressure on owners.

A properly managed capital works fund helps reduce the likelihood of unexpected special levies and allows schemes to spread costs more fairly over time.

Buyers are paying closer attention

Capital works funds are no longer just an administrative detail buried in strata records.

Buyers, solicitors and lenders are now paying much closer attention to:

• the balance of the capital works fund

• upcoming major works

• whether the building has a realistic maintenance plan

• signs of deferred maintenance

• the likelihood of future special levies

In many cases, a well-funded and proactively managed building is viewed more favourably by buyers than a building with unusually low levies but poor long-term planning.

Low levies can sometimes be a warning sign rather than a benefit.

Good planning protects property values

Strong capital works planning is not just about compliance.

It plays a major role in:

• protecting the condition of the building

• reducing disputes between owners

• maintaining resident satisfaction

• supporting insurance and compliance obligations

• protecting long-term property values

Well-maintained buildings tend to attract stronger buyer confidence and often avoid the reactive decision-making that creates stress within strata communities.

The role of proactive strata management

Good strata management is not simply about responding to problems after they happen.

Proactive management involves:

• regularly reviewing capital works plans

• forecasting future expenditure

• helping committees understand upcoming obligations

• coordinating maintenance planning

• balancing levy affordability with long-term building needs

As NSW strata laws continue to evolve, financial planning and building maintenance are becoming increasingly important responsibilities for owners corporations.

The buildings that plan early are usually the ones that avoid the biggest financial surprises later.