A building manager is responsible for overseeing the day-to-day operations of a building or property. Some benefits of having a building manager include:
Maintenance and repairs: A building manager can ensure that the building is properly maintained and repairs are carried out in a timely manner. This can prevent minor issues from becoming major problems that can be costly to fix.
Safety and security: A building manager can help ensure the safety and security of the building and its occupants. This can include implementing security measures such as surveillance cameras, alarm systems, and access control systems.
Tenant satisfaction: A building manager can help ensure that tenants are satisfied with their living or working environment. This can include addressing concerns and complaints promptly, and ensuring that common areas are clean and well-maintained.
Cost savings: A building manager can help identify cost-saving opportunities by implementing energy-efficient measures and negotiating with vendors for better pricing on maintenance and repair services.
Compliance: A building manager can help ensure that the building is in compliance with all relevant regulations and codes, including building codes, fire safety regulations, and health and safety regulations.
Convenience: Having a building manager working for you on or off-site can provide convenience for tenants by allowing them to quickly and easily report issues or concerns, and have them addressed in a timely manner.
Overall, having a building manager can help ensure that the building is well-maintained, safe and secure, and that tenants are satisfied with their living or working environment.
Formerly the sinking fund in the NSW Strata Schemes Management Act 1996, the Capital works fund (CWF) is a much better title for the fund from which capital works at a scheme must be paid from. The Capital Works fund is still called the sinking fund in the Community Lands Management Act and in other states.
Budgeted properly from day dot, a scheme should now have little need to raise a special levy for capital expenditure in future years.
The Act (S79) is clear on how a scheme is supposed to budget for its administrative and capital funds:
Account properly for what funds are left in the respective fund at the end of the financial year
Prepare a budget for the coming year’s expenditure:
The admin fund should be an extrapolation of the PY admin costs (with an escalation for CPI) and any other known contracted costs.
Assess the levies required to meet the obligations of each fund, taking into account any prior year surplus or deficit in either fund.
Despite the Act being clear as to what is required, adequate budgeting to the CWF is still rare. I put this down to several factors:
The 10 year plans being drafted were (and still are in some cases), not worth the paper they are printed on and the budgets inadequate when seemingly expected works arrived (painting, roof works, etc). These have improved across the board and despite being a very cheap report, are of real value when done well and implemented properly.
Owners and strata managers fail in their obligation to budget adequately, playing catch-up with special levies when works come about.
At brand new schemes, often the initial budget being put forward is inadequate and not based on a plan. This is easily overcome by ordering a plan once a scheme is registered, given there are not less than 2 months before the First AGM must be held.
Buildings have fallen into such disrepair due to mismanagement by the strata manager and owners corporation that the owners are overwhelmed and refuse to implement the work they are required to do as they don’t know where to start. This leads to a loss of values and potentially a compulsory appointment of a strata manager by NCAT.
Owners don’t know what adequate levies look like as they transpose their experience at one scheme to another, or have been led down a garden path by a developer/strata manager putting forward inadequate estimates (which despite being a breach of the 2015 Act, still happens routinely).
I am not going to go into any detail on types of expenditure that come from the capital works fund, as this relates to the building fabric (which is different at every scheme), however, these are generally the larger ticket items:
Painting
Roofing
Waterproofing
Guttering
Hydraulics
Fire equipment
Landscaping
Access control
Carpeting/tiling
Doors / windows
How do we fix these issues ongoing?
Get a quality 10-year plan (which must be updated every 5 years) from the likes of Solutions In Engineering – ask questions about the report, particularly for any work in the near future (maybe even obtain a quote to see if the external painting work in 3 years is a realistic cost).
Implement the plan – irrespective of what that means to a levy increase. If there is urgent work outstanding, perhaps draw a line in the sand and get the work done asap via a special levy or strata loan so that levies can be made lower once the work is done – e.g. a scheme has $100k in the CWF and has to do a $500k repaint in 6 months. Raise the money over years and the work becomes more expensive and more urgent due to resultant damage – get the work done asap to incur short term pain but restore value.
Educate/educate/educate – the CWF pays for the sexy stuff that helps a building look good down the track and compete with newer stock in the market. Owners should understand that putting $1.5k-$2.5k aside each year in this fund (in the case of a new scheme) protects their asset.
As a guide, a brand new scheme (apartments/townhouses) should set aside between $1.3k-$2k per lot per annum, depending on the nature of the building and its specific maintenance requirements.
