10-Year Capital Works Plans & the 2025 NSW Strata Reforms

Introduction

The 2025 NSW strata law reforms, introduced through the Strata Schemes Legislation Amendment Act 2025 (NSW), bring significant updates to the management of every strata scheme in NSW. A central element of these strata law changes is the enhanced focus on long-term financial planning, as mandated by the Strata Schemes Management Act 2015 (NSW). The 10-year capital works plan is a critical tool for owners corporations to proactively manage the repair and maintenance of common property, ensuring financial stability and compliance.

These strata reforms introduce new obligations, including standardised forms and a greater emphasis on translating the long-term strategy into practical, annual budgets. This guide provides essential information on these key changes, focusing on how the 10-year plan informs the annual estimates and the 1-year capital works plan. Given the complexities of the new strata laws, this guide also highlights the importance of consulting a strata lawyer to ensure your strata scheme remains compliant.

Strata Law Requirements for Capital Works Plans in NSW

The Introduction of Standardised Forms from 1 April 2026

Under the new strata law reforms in NSW, owners corporations will face updated requirements for their long-term financial planning. Commencing 1 April 2026, any new or reviewed 10-year capital works fund plan must be prepared using a new standard form. This change is a key part of the Strata Schemes Legislation Amendment Act 2025 (NSW) and aims to improve consistency in how maintenance is planned and budgeted.

If a strata scheme already has a 10-year plan in place, it does not need to be immediately transferred to the new format. The requirement to use the standard form only applies when:

• The existing plan is being reviewed
• A new plan is created to replace one that has expired

To help schemes prepare for this transition, the standard form has been made available in advance.

Integrating Sustainability Infrastructure into Capital Works Estimates

The NSW strata law changes also place a new emphasis on environmental sustainability. Owners corporations are now required to consider costs associated with sustainability infrastructure as part of their move towards sustainable building, when preparing the capital works fund estimates presented at each annual general meeting (AGM). This ensures that schemes are proactively budgeting for green initiatives.

This obligation includes planning for the expenses related to the installation, replacement, or repair of various sustainable features, such as:

• Electricity meters
• Solar panels
• Sustainable building materials
• Electric vehicle charging stations
• Other fixtures or fittings that promote sustainable use of the common property

Obligations for Developers & the Initial Maintenance Schedule

The reforms strengthen developer accountability for new strata schemes. The original owner is required to provide an Initial Maintenance Schedule (IMS) to the owners corporation before the first AGM. From 1 April 2026, this IMS must be prepared using a mandatory standard form.

For new multi-storey schemes, such as apartment blocks, developers have additional obligations to ensure the initial financial and maintenance planning is accurate. These developers must:

• Engage an independent surveyor to review and certify both the IMS and the initial levy estimates
• Ensure the surveyor is not connected to the developer to maintain impartiality
• Obtain certification that the initial levy estimates are sufficient to meet expected expenditure for the year following the first AGM
• Provide evidence of these certifications to the owners corporation at least 14 days before the first AGM

This certified IMS is a critical document that the owners corporation must consider when preparing its very first 10-year capital works fund plan. Failure by a developer to meet these requirements can result in substantial penalties.

The Role of the 10-Year Plan in Financial Management & Maintenance

Preventing Special Levies & Ensuring Financial Stability

A well-prepared 10-year capital works fund plan is fundamental to establishing a proactive financial culture within a strata scheme. This forward-thinking approach allows the owners corporation to build up funds progressively, anticipating the costs associated with an aging building.

By planning for major expenses, the need to raise sudden, large special levies to cover unexpected works is significantly reduced. Without a structured plan, a strata scheme may face financial instability when major repairs become necessary.

This often forces the owners corporation into reactive measures, which can include:

• Raising emergency special levies, placing an immediate financial strain on lot owners.
• Taking out strata improvement loans, which accrue interest and increase the overall cost of the works.

Maintaining Asset Value & Attracting Prospective Buyers

A comprehensive 10-year plan is crucial for maintaining the building in good condition, which directly preserves the asset value of the strata scheme. Proactive maintenance prevents the property from deteriorating and ensures it remains a desirable place to live.

For prospective buyers, the existence of a detailed capital works plan signals that the building is well-managed and financially sound. Conversely, the absence of a plan can act as a significant “red flag,” suggesting poor future planning. This can deter potential investors and negatively impact the sale price of individual lots.

Meeting Statutory Obligations Under the Strata Schemes Management Act

Under New South Wales strata law, owners corporations are legally required to prepare for future expenditure. Section 80 of the Strata Schemes Management Act 2015 (NSW) mandates that every strata scheme must prepare a 10-year plan for its capital works fund.

The primary purpose of this legislation is to ensure that schemes anticipate and budget for major capital works. The Act requires that an owners corporation implement its prepared plan “so far as practicable.” While there are no direct fines for failing to follow the plan, ignoring this duty can lead to other serious consequences, including:

• The deterioration of the building
• Potential legal liabilities

Developing the Plan & Annual Capital Works Estimates

Identifying Major Capital Items for Repair & Replacement

A comprehensive 10-year capital works fund plan must document all major common property items that will require repair or replacement over the next decade. This proactive approach helps the strata scheme budget effectively and maintain the building’s condition.

To ensure future works are scheduled accurately, the plan should:

• Assess the current state of these items
• Estimate their remaining lifespan

Key capital items that are typically included in the plan are:

Category	Description & Examples
Building Exteriors	Includes the complete repainting of the building, as well as repairs or replacement of the roof and guttering.
Common Area Interiors	Items such as carpets in hallways and foyers that experience regular wear and tear must be budgeted for replacement.
Building Infrastructure	Major mechanical components like lifts require periodic overhauls or replacement, which involves significant expenditure.
Grounds and Boundaries	Fencing, driveways, and landscaping are also considered major capital items that need to be maintained and eventually replaced.
Shared Amenities	Facilities such as pools and furniture in common areas should also be factored into the long-term plan.

Preparing Capital Works Fund Estimates for the Annual General Meeting

The long-term 10-year plan serves as a guide for creating the annual budget. At each AGM, the owners corporation is required to prepare and present capital works fund estimates for the upcoming year.

This process translates the broader 10-year forecast into a practical, one-year operational budget, ensuring sufficient funds are available to meet expected expenditure.

As part of the NSW strata law reforms, these annual estimates must also account for the installation, repair, or replacement of sustainability infrastructure. This includes considering costs for:

• Solar panels
• Electricity meters
• Other sustainable building materials

When preparing the first 10-year plan for a new strata scheme, the owners corporation must consider the IMS provided by the developer.

Reviewing the Plan Every Five Years & at Annual General Meetings

To remain relevant and accurate, the 10-year capital works fund plan must be formally reviewed at least every five years. This legislative requirement ensures the plan adapts to the changing needs of the strata scheme.

However, it is considered best practice to review the plan annually at each AGM. An annual review allows the owners corporation to:

• Adjust for factors like inflation
• Address any unexpected deterioration of common property
• Incorporate new maintenance needs

From 1 April 2026, any review of an existing 10-year plan or the preparation of a new one must be done using a new standard form, aligning all NSW strata schemes with a consistent planning format.

Risks Associated with Failing to Implement a Capital Works Plan

Potential for Compulsory Appointment of a Strata Managing Agent

A failure to adequately plan for future maintenance can be viewed as evidence that an owners corporation is dysfunctional. This neglect can lead to a strata dispute before the NSW Civil and Administrative Tribunal, with an application for the compulsory appointment of a strata managing agent to take over the scheme’s management.

Under the recent NSW strata law reforms, NSW Fair Trading also has the power to apply for such an order if an owners corporation breaches its duties.

This situation typically arises when:

• The strata committee fails to implement its 10-year plan, resulting in a deficient 1-year capital works plan.
• The deterioration of common property becomes evident due to this lack of planning.

Consulting a strata lawyer can help an owners corporation understand its obligations and avoid actions that could lead to a compulsory appointment.

Legal Liability for Neglected Common Property Maintenance

Owners corporations in NSW have a strict legal duty to repair and maintain common property. Neglecting this responsibility exposes the strata scheme to significant legal risks, as owners can sue for damages that result from a failure to maintain these areas.

The Strata Schemes Legislation Amendment Act 2025 (NSW) has extended the time limit for owners to bring such claims from two years to six years.

This extended limitation period increases the potential for legal action, especially if:

• The lack of a coherent 10-year plan results in an inadequate annual budget for necessary repairs.
• An owner’s property is harmed due to the owners corporation’s neglect, which can lead to successful claims for damages and drive up costs for all lot owners.

Strata Information Certificate

The 10-year capital works fund plan is a critical document for prospective buyers. It must be included with the Section 184 Strata Schemes Management Act 2015 (NSW) Certificate provided during the sale process, offering insight into the financial health and management of the strata scheme.

The absence of a well-prepared plan can:

• Act as a major “red flag” for potential purchasers, suggesting poor future planning and the likelihood of special levies.
• Deter buyers and negatively affect the sale price of individual lots, as an underfunded or disorganised plan indicates a higher risk of future financial instability.

The Importance of Consulting a Strata Lawyer for Your Scheme

How a Strata Lawyer Can Assist with Compliance & Disputes

The 2025 NSW strata law reforms introduce significant new obligations for every strata scheme. Seeking expert legal guidance is crucial to ensure your owners corporation complies with the new regulations and avoids potential strata disputes or financial penalties. A strata lawyer can help interpret the complex strata law changes and advise on necessary adjustments to your scheme’s operations.

Legal professionals are essential for managing disputes that may arise from the new strata laws. Their assistance is particularly valuable in areas such as:

Area of Assistance	How a Strata Lawyer Can Help
Levy Recovery	The strata reforms introduce new rules for payment plans and debt recovery. A lawyer can ensure your strata committee follows the correct procedures for strata levy recovery when dealing with overdue levies, which helps prevent legal challenges from owners.
Maintenance Disputes	The Strata Schemes Legislation Amendment Act 2025 (NSW) extends the time limit for owners to sue for damages related to neglected common property. A lawyer can advise on your scheme’s maintenance duties under the Strata Schemes Management Act 2015 (NSW) and represent the owners corporation in any legal actions.

Managing Complex Strata Reforms & Management Agreements

The strata law reforms of 2025 bring substantial changes to the governance of a strata scheme, particularly concerning management agreements. Legal advice is highly valuable for reviewing existing strata and building management agreements to ensure they align with the new requirements. This is especially important as the reforms introduce new duties for managers and ban certain unfair contract terms.

A strata lawyer can provide critical support in reviewing and negotiating these agreements. They can help your strata committee understand the implications of the new strata law, including:

• New limits on contract terms
• Mandatory disclosure requirements

Engaging a legal advisor ensures that your management agreements are fair, compliant, and protect the best interests of the owners corporation.

Conclusion

The 2025 NSW strata law reforms introduce critical updates to how every strata scheme manages its long-term finances, with the 10-year capital works plan being central to meeting these new obligations. These strata law changes emphasise translating this long-term strategy into a practical 1-year capital works plan, ensuring financial stability and compliance with the Strata Schemes Management Act 2015 (NSW).

To ensure your strata committee is prepared for these significant strata reforms, contact PBL Law Group’s expert strata lawyers for specialised legal advice. Our team in NSW and Sydney can help your strata scheme meet its new obligations and maintain compliance.

Frequently Asked Questions