Maintaining any building in good repair takes skill, conscientious attention, and planning. A major part of ensuring your building stays up-to-code and safe for those living or working within it, is having enough money set aside to cover necessary repairs and upgrades as they arise. This is an Australian Sinking Fund. Read on to find out the top five reasons you need one.
What Is A Sinking Fund?
In Australia, the law requires a sinking fund to be set up by a building’s owner’s corporation, or body corporate. This is an emergency fund from which money can be drawn in times of need.
Is it expensive and time-consuming to put money aside that may never be used? It could be, but you will still want to do it.
Here are 5 reasons why you need an adequate Australian sinking fund in place:
1) It’s the law
One of the most prominent reasons you need to have a sinking fund is that it’s the law. This law dates back to July 2009, when it was first declared that all Australian strata schemes are required to have a 10-year fund in place.
A strata scheme is a model of property ownership. It allows for many people to own individual parts of the property as shared ownership of the entire place. Anyone owning a property like this will need to contribute towards an Australian sinking fund for the greater good of the whole building.
2) You need to keep people in the building safe
Beyond the legal requirements, you want to keep your building safe for those who live or work in it. We’ve all heard horror stories involving buildings that come under incredible disrepair, which sometimes, although rarely, can prove to be fatal.
It’s tragic to have someone hurt or lose their life due to the neglect of building repair.
Having money set aside to cover things like repairs to lifts, new paint, door entry repairs, the replacement of fences, driveway repairs, a new roof, and a new window ensures everyone stays safe and sound.
3) It’s an investment
Saving money to keep your building at its best is also a significant investment. Regular wear and tear can cause any structure to become run down over the years. By keeping things in shape, your building remains attractive to investors and buyers.
In essence, an adequate sinking budget also helps you maintain the market value of your property over time.
4) A proper sinking fund ensures your building looks great
Do you have peeling paint and windows that don’t really keep the wind and rain at bay? Residents are bound to complain. Repairing problems in good time keeps residents happy, which helps to minimise conflicts in the building over its maintenance.
5) It helps protect you from charging special levies
With the proper budget being collected over time, when something big comes up like the need for a new roof, or the need to replace the water pipes, you have a greater chance of having the funds available to cover the cost with an adequate sinking fund. Without one, you could end up charging residents special levies in order to get the work done, or you may have to resort to relying on large loans.
Having a well-stocked sinking fund in place protects the body corporate legally and also ensures the happiness and well-being of residents and workers who spend time inside the building.
Not sure how your building rates? At Quality Building Management, we specialise in professional building inspections. We are also available to conduct reporting and complete training services for the strata title, body corporate and commercial real estate markets and to provide Australian sinking fund estimates.
Our specialties include all aspects of dealing with asbestos, as well as fire safety and evacuation planning.
Contact us for a free quote for your strata property today!