What does this mean : Capital works fund (Sinking)

Hi guys,

What does this mean: Capital works fund (Sinking) ? Do all Units / Apartments have this ? And how about houses ?

Is there any rule which determines what value of Capital works fund (Sinking) is good ?

Thank you

 

Applies to all strata and community titled property.

This is some of the money set aside in the strata levies to pay for the major maintenance items of the complex eg repainting exteriors, carpet in foyers, guttering driveways.

It is pooled funds and your unit has contributed according to it's unit entitlement. You so not have access to these funds but ate directed in accordance with the annual budget and long term plan for the complex.

Read or subscribe to 'flat chat'.

The alternative view is that it's the money you have sunk into your investments and you're drowning.

 

In an independently owned house, it is up to the owner as to whether or not they have a separate fund for maintenance.

In an apartment complex, a sinking fund is kept to provide for expected, but irregular, maintenance so that all owners contribute, not just those who own the units at the time the repair is needed.

Things such as external painting, roof repairs, replacement of floor coverings or electrical upgrades in common areas, etc, should all be allowed for.

Obviously a healthy balance is a good thing if buying into a complex. A low fund balance means that, in the event of a sudden, major expense, current owners will be charged a special levy to cover the cost if the sinking fund balance is insufficient.
Marg

 

Thank you guys

 

Wonder if any if this is helping you make decisions. More like getting more and more pieces to a jigsaw puzzle without the box.

 

I think you will benefit from a good Property book - start with Jan Somers' books:

Books

Look at the big picture

How do you aim to piece all the bits of information

Recipe for disaster (metaphorical of course!)

 

beware of property developer saying their strata levies are low, as a selling point. after a while the owners will realise the developer has underestimated the sinking fund just to make the units more saleable.

 

I often find it interesting people investing in houses say they are cheaper than apartments.....nope you just aren't adding up the costs correctly

 

Just ignore these costs as they're optional - major items don't require replacement on houses.

 

ha ha yep that sounds about right