All stratas over 10 lots or $5M have to have a 10-year plan. Image – Canva.
In 2020, WA changed its strata laws for the first time in more than 30 years.
One important change is for stratas of more than 10 lots to have a 10-year plan.
This is to ensure all necessary maintenance and repair jobs are completed.
In May 2020, Western Australia’s strata laws changed for the first time in over 30 years.
Under the revised Strata Titles Act 1985, the 10-year plan and reserve fund have become a requirement for certain strata schemes. It applies to schemes with more than 10 lots or a replacement value of over $5 million.
Why would you need a 10-year plan?
To plan for the future of your scheme.
Stay on top of maintenance and repairs that may arise.
Identify upcoming expenditure and ensure funds are available when needed.
The 10-year plan sets out the anticipated maintenance, repair, renewal or replacement requirements (other than of a routine nature) for any items of common property and personal property of the strata company, that is likely to arise in the next 10 years.
It includes estimates of the expected costs and timeframes. For example, this could include replacing the roof cover, saving up funds for the refurbishment of a lift or resurfacing the pool.
The reason for this new stipulation is that without a 10-year plan, some strata apartment and unit blocks were falling into disrepair, with no budget to bring the property up to livable standards. This was while people were still living in the properties.
A 10-year plan should outline what kinds of things need to be done, over time, to keep the property in good order for all concerned.
Relationship between a reserve fund budget and a 10-year plan
It is important for strata owners to understand the difference between a reserve fund and a 10-year plan as my colleague Kristian Jeromson from Asset Reports points out.
“The reserve fund budget is intended to ensure strata owners understand how much money they will need to put aside to afford large expenses when they occur.
It is the duty of a strata company to determine what amount is needed to maintain their strata scheme.
A well prepared 10-year plan helps establish the amount of funds the reserve fund should hold to avoid the need for huge ‘one-off’ special levies.”
What is a condition report?
Often overlooked in discussions about the 10-year plan is the requirement for a condition report.
The regulations require a strata scheme to have:
“a report about the condition of the covered items and the anticipated maintenance, repair, renewal or replacement requirements of the covered items in the period covered by the plan (a condition report).”
The condition report must include the following information about a covered item:
The date of installation, construction or acquisition.
The present condition or operating state.
The date on which an inspection was last undertaken.
Details of any anticipated work to be required in the period of the plan.
The date(s) on which it is estimated that the work is likely to be required.
Details of the estimated cost.
The estimated lifespan of the covered item or items once actioned.
Strata companies should ensure contractors hold the appropriate qualifications when being appointed to provide a condition report to assist budget preparation.
Before making any decisions, please do your own independent research, taking into account your own situation. This article does not purport to provide financial or investment advice.
