Victoria Queensland sinking funds have a key distinction between strata sinking fund requirements in Victoria and Queensland for 2026. Victoria has an emphasis on maintenance fund plans when it comes to larger owners corporations; in Queensland the regulation module compels body corporates to put aside money for common-property costs down the road. In either state lot owners are expected to put in sufficient funds for any major repairs, yet you will not find some magic dollar figure handed out to every scheme. What is required of a building is a function of its assets, age, size, condition and capital expenditure that is to come.
I am Rhys Parker. My time in property operations and hospitality has taught me that it is the unglamorous details that tend to be the most aggravating. A roof that is leaking or a lift past its best makes no allowance for a neat annual budget. Here I set out the legal framework as it stands in 2026 for Victorian and Queensland strata schemes, what to expect in terms of practical budgeting and where the pitfalls are.
What is covered by a Sinking Fund
In some quarters it is referred to as a reserve fund, but a strata sinking fund is for the significant future costs of common property. Do not confuse it with the operating or administrative budget for your day-to-day running costs like utilities, insurance, gardening, management and the like.
The fund is there to see to the replacement of building assets and major repairs: roofs, cladding, fire systems, pumps, garage doors, concrete, plumbing, waterproofing, shared electricals and lifts. It is not a piggy bank for private renovations in one’s own lot, though one is often taken in by that. This is why NSW strata capital works plans matter.
Capital versus routine
An asset is kept in working order by routine maintenance. Capital expenditure is for renewal or a substantial improvement. You might consider a new light fitting an operating cost, but a whole new lighting system for the building would be capital. How it is accounted for can hinge on the work done and what is in the scheme’s records.
Body corporates and owners corporations would do well to have their inspection reports, warranties, maintenance obligations and the costs of prior projects at hand. Relying on guesswork to make a forecast is like having a paper umbrella in a Queensland storm.
Planning in Victoria
Under the Victorian Owners Corporations Act 2006 and its regulations, the question is whether an owners corporation is obliged to have a maintenance fund plan by virtue of its tier or if it is simply a sensible thing to do. The tiered system in Victoria is determined by the complexity of the owners corporation and how many occupiable lots there are. Larger schemes will be under more of an expectation to plan, but smaller ones are still on the hook for collecting the necessary funds and looking after common property.
The relevance of a maintenance plan
If an owners corporation is of a certain size it must have a plan to account for the contributions, timing and estimated cost of the works ahead. But a plan from a Victoria owners corporation is not something to be left in a filing cabinet. It is for budgeting. Should a lift contractor report a component is about to give way or the roof has seen more wear than was put on paper, the plan has to be brought up to date. And while smaller schemes may not have to meet a mandatory threshold for such a plan, they are no less bound to their maintenance duties or to shield owners from an unexpected special levy.
A test for the budget
Can the owners corporation put together the next big project without being too hard on the lot owners? If not, then the annual budget is probably short of mark despite having been approved.
Any good sinking fund forecast in Victoria should lay out the numbers for each year, from opening to closing balance, including planned contributions, inflation and what is expected to be spent, along with the assumptions made. “Allow a bit for repairs” is a shrug in spreadsheet form, not a forecast.
Queensland body corporate
For the body corporate in Queensland the sinking fund requirements are a matter of the Queensland Body Corporate and Community Management Act 1997 and the relevant regulation module for the community titles scheme. An annual sinking fund budget is put in place as a rule to cover the capital expenditure that lies ahead for the body corporate and its common property. There are differences between the way Victoria handles its maintenance fund plan and the system in Queensland. While a body corporate is expected to put aside funds for work down the road in a responsible manner, the nitty-gritty of the administration, the budget period or what is needed for approval will be dictated by the regulation module in force for the scheme, be it Standard, Accommodation, Commercial, Small Schemes or Specified Two-lot.
Forecasting Future Expenditure
In Queensland one would look at the state of the common-property assets and their anticipated life span to arrive at a sinking fund budget. For most schemes this is underpinned by a long-term forecast of things to come; a nine-year horizon is typical in these discussions. Owners are well advised to check their scheme records and regulation module to be sure of the requirement though. Annual budget preparation, including sinking fund estimates, is mandatory for all bodies corporate in Queensland according to official budgeting requirements.
The body corporate has to take into account all the shared assets: from the roof, lifts and access systems to pool plant, fire equipment, concrete and painting or any retaining structures. An indication of when work is due and at what cost should be on record, as well as an assessment of whether contributions will hold up when the project is at hand.
Should owners require some official guidance on community titles schemes and the like, the Queensland Government has information on body corporate matters available via its housing and neighbourhood law resources: Queensland Government body corporate information.
Module Rules Matter
It is a mistake made in Queensland to think all schemes are governed by the same set of rules. The module you are under will have a bearing on dispute processes, records, contributions and even how meetings are run. A committee would do well to establish which module applies before making use of some generic online checklist.
When it comes to the sinking fund budget, the committee ought to put the proposed contributions and balance against the forecast. Where a large project is three years off and there is not much in the fund, it is preferable to put up contributions now than to have to call in a hefty special levy at a later date.
Victoria And Queensland Compared
You will find different terminology and machinery in each state, even if both insist on planning for the big ticket items. In Victoria they speak of owners corporations and maintenance fund plans; in Queensland it is a matter of body corporates and a sinking fund budget as per the regulation module.
The table that follows is a guide to the practicalities, but nothing in lieu of looking at the legislation for the scheme in question.
| Issue | Victoria | Queensland |
|---|---|---|
| Primary body | Owners corporation | Body corporate |
| Main legal framework | Victorian Owners Corporations Act 2006 | Queensland Body Corporate and Community Management Act 1997 |
| Planning language | Maintenance fund plan (larger schemes) | Sinking fund budget, long-term expenditure planning |
| Operating fund | Owners corporation administrative budget | Administrative fund budget |
| Future major works | Maintenance fund and planned contributions | Sinking fund and planned contributions |
| Forecast focus | Obligations of the maintenance plan, size of scheme and building condition | Applicable regulation module, capital expenditure and asset life |
| Common risk | Not putting in place long-term plans for small schemes | A stale budget or the wrong regulation module |
Then again, neither state can ensure a scheme will be free of special levies. Unforeseen defects, insurance claims or the need for safety work can alter the figures no matter how good the forecast is.
Forecasts Levies And Contributions
An asset register is where the process of turning building data into hard numbers begins. One then makes allowances for future price rises, current costs and the likelihood of when an asset will have to be replaced. Professional fees, contingencies and the odd temporary safety measure should be factored in too.
The annual budget will determine the level of body corporate levies and owners corporation contributions. These can be apportioned by lot liability or whatever the law deems appropriate. It is for the owner to examine the budget and the levy notice and not make the assumption that each lot is paying the same.
Building A Useful Forecast
Plain English is called for in a sensible 10-year plan for the sinking fund: what the asset is, its condition, what work is in prospect, the year and cost, where the funding is to come from and the impact on contributions.
Do not be misled by “estimated”. A 10-year forecast is no crystal ball but it will show a funding gap even if the precise price tag for a project ten years hence is impossible to put on paper. It is better to see that concrete repairs and a new roof are going to coincide with painting than to find out when the bills are presented.
As for inflation, let recent tender prices and the experience of local contractors inform the forecast rather than having it put in a formula unasked. Engineering advice is a sound basis. And the forecast must be brought up to date after any substantial works are given the go ahead or a major inspection is done.
What Owners Should Check
A good practice for lot owners is to put the present fund balance up against the spending that has been put in place for the next half a decade. One should also look to see if the forecast has accounted for assets of the kind that can be missed, be it fire doors and access gates or intercoms, stormwater pumps and basement ventilation.
In my time with operational budgets I have found that what are at first small omissions will, over time, turn into rather large and embarrassing conversations. Strata schemes are not exempt from this. A levy imposed because an asset has given out in the wet season is harder to deal with than making provision for it each year in a modest allowance.
Underfunding And Special Levies
The repair does not go away simply because the sinking fund is short. The committee is left to either call in a special levy, borrow where it is commercially and legally sound, or put up regular contributions; all of which have their cost and fairness considerations. To say nothing of the fact that underfunding can lead to disputes between owners, old and new, compromise safety and let maintenance slip. It can make for complicated sales as well, with buyers and their lenders poring over the minutes, defect reports and any planned capital works.
Expectation Versus Reality
The expectation is that an efficiently run scheme will have a low levy. The reality could be that expensive work has been put off. You might think a healthy bank balance is proof of an adequate fund but one has to measure it against the cost and timing of what is to come. $100,000 in reserve may be plenty for one building and leave another exposed.
There is no dollar amount per lot that is universally reasonable. A coastal property with corrosion issues, a high-rise and its lifts, and a townhouse scheme with little in the way of common property will have needs that are worlds apart.
Compliance Checklist For 2026
For committees and owners to get ready for the coming budget cycle, the following checklist is of use. It is about practical evidence since a well put together meeting minute will not fix a retaining wall.
- Determine the size of the scheme and the applicable legislation and regulation module, whether in Queensland or Victoria.
- See if a longer-term forecast, a sinking fund budget or a maintenance plan is called for.
- Put the common-property asset register in order with details on age, condition and past repairs as well as warranties.
- Get up to date figures on the cost of access, professional fees and any major replacement or repair.
- Make sure the forecast is inclusive of inflation and contingencies and of projects approved but not yet settled.
- Do not move money from one purpose to another without authority; keep administrative costs and capital expenditure distinct.
- When levies are changed, lot owners should be told why and when, and for what project.
- Have legal or engineering counsel on hand for anything complex.
And for those in NSW, do not mix up the rules with Victoria’s. Under the 2015 Strata Schemes Management Act there is a capital works fund model and a strata capital works plan, which is a point of comparison, not a requirement in Victoria or Queensland.
Frequently Asked Questions
How Much Should Be In A Body Corporate Sinking Fund?
It is not a case of there being a right figure. The sum in the fund plus what is to be contributed ought to be sufficient for the capital expenditure as it comes due. What is needed will be dictated by the location, size and state of the scheme’s assets.
What Is A Sinking Fund Requirement?
By law and in practice one has to put aside money for the future costs of common property. A body corporate in Queensland will have a sinking fund budget under the relevant regulation module. In Victoria a maintenance fund plan may be necessary for some larger owners corporations, though every scheme must honour its maintenance obligations.
Sinking Fund Or Strata Fees?
Strata fees is the catch-all for what owners put in for administration and the like. The sinking fund is what is reserved for the more substantial work down the track, whereas the administrative fund is for the running of things.
What Would Be Reasonable?
Something that is backed by a credible forecast and not an arbitrary number. It should be commensurate with the building so owners can put in their share before the need for major works arises. A fund is not reasonable just because it is big if it cannot see you through the next project.
Is A Long-Term Plan For Small Schemes Necessary?
They may not have to meet the same formalities if the threshold for a maintenance plan is not reached, but the obligation to maintain common property remains and the costs can be considerable. A straightforward forecast is worth having for external painting, driveways, drainage and so on.
Plan Before The Bill Arrives
Both in Victoria and Queensland the requirements of the strata or body corporate are best met with some early planning based on evidence. The best forecast is not the most elaborate; it is the one that is true to the building and allows lot owners to make their preparations.
Before they give the nod to annual contributions in 2026, committees would do well to take stock of the law, the assets and the planned expenditure. A fair budget is not as much fun as a new lobby but it puts a roof over your head and that is a result in itself.