New legislation introduced in WA brings key changes to the Strata industry.
Since strata commenced, we have had ‘sinking funds’ available as reserve funding for maintenance requirements, with corporations adding quarterly by means of levies from owners. The new legislation, Regulation 76, which was introduced in WA on 1st May 2020, sees key changes as follows;
- Strata schemes with 10 lots or more are required to have a 10-year maintenance plan and reserve fund. This is also required from schemes with a $5 million replacement cost for building/s or improvements on the common property.
- The regulations set out the requirements for the 10-year plan.
- Importantly, these requirements include that the strata company needs to make a list of common property elements that are expected to require maintenance, repair, renewal or replacement in a 10-year period.
- This knowledge will assist owners when they are considering how much the reserve fund should contain, and how much it should have established over time.
So what do these reforms mean?
There are larger schemes that will meet the requirements of this legislation in forecasting for the strata scheme and can give estimated costs for the maintenance, repair, renewal and/or replacement. Schemes need to be aware that if there is a large amount of work to do, this may have an impact on your insurance and could in some cases increase associated costs. Schemes are encouraged to discuss the works and associated costs before forwarding to any insurance provider.
Many buildings that have put off improvements like new windows, roofs, simple rendering and paint projects, may now have the ability to do several smaller projects together utilising the forecasted sinking fund. These reforms are still subject to the expenditure controls of the strata company and where the expenditure exceeds an amount provided in the regulations, the requirement of a special resolution is still necessary. It will however, be easier to get strata company approval for installing sustainability infrastructure on common property, such as solar panels, and improve disability access on common property. It will also be easier to make improvements to common property which go beyond simple repair and maintenance.