WA Strata Reform – Reserve Funds & Maintenance Planning
Western Australia – Strata Reform Process
Strata Titles Amendment Bill 2018 and Community Titles Bill 2018 were passed by Parliament on 1 November and 6 November 2018, respectively. Both Bills were assented to and became Acts on 19 Nov 2018.
The government has commenced drafting the regulations and currents it expected that they will be proclaimed by the end of 2019.
The reforms are substantial are are seem a positive for the industry. Some of the benefits highlighted by Langate include:
- Strata managers will be regulated and made accountable
- Owners will have more say in how their scheme is managed
- By-laws will be easier to enforce
- Owners will be empowered to improve their scheme
- One-stop-shop to resolve strata disputes (State Administrative Tribunal of Western Australia)
- Buyers of strata will get better information.
In relation to Item 6; every Strata company with 10 or more lots (or having a high building replacement value must have:
- A reserve fund and
- A maintenance plan listing the estimated maintenance of buildings required over a 10 year period: s. 100(2A)
Reserve (or Sinking Funds) are quite common within the Strata Industry on the East Coast, these plans will often cover 10 -25 years. The strata reform currently has 10 years listed as the proposed timeframe. These plans are generally high level and generic produced by quantity Surveyors based on generic construction cost rates per square metre.
The proposed legislation nominates a 10 year plan that is revised at least every 5 years and presented at the AGM.
Although this is seen a positive in the industry the legislation does not provide a Framework or template for these reports and thus are open to interpretation.
From our recent dealings with the industry, we have observed that there is a variance of the detail provided in Reserve fund plans and maintenance plans, some of which are high level with not much detail.
HFM’s approach is a ground up approach, it requires our consultants to undertake full site inspections, prepare full asset register of major plant, review maintenance contracts and service records. Only once all this work has been undertaken can a full appreciation of the building and expected future operating costs be prepared.
For Further information on Strata reforms and it’s implication feel free to contact us on 08 9213 7100.
David Chokolich – General Manager, Technical Services