Sinking Fund Forecasts: FAQ'S

What is a sinking fund forecast?
It is a forecast of the likely costs a body corporate (or owner's corporation) will need to contribute each year to its sinking fund, in order to replace plant and equipment and to carry out major repairs which will occur over time.

How does a sinking fund help owners protect their investment in the building?
A sinking fund forecast demonstrates to prospective buyers that provision has been made for future replacement and large maintenance requirements. Purchasers are becoming better informed and are learning to ask questions in relation to administrative and sinking fund budgets. They are aware that bodies corporate which do not adequately provide for maintenance and repairs are a source of future expense.

Does a sinking fund help sell units?
Yes it does. First impressions of the building's exterior count enormously with prospective buyers. A building with an adequate sinking fund always looks good.

Does a sinking fund forecast distribute costs more equitably amongst owners?
Yes it does. A professionally prepared forecast from our company will ensure that all owners pay for the cost of delapidation that occurs during their period of ownership, in accordance with the entitlement scheme.

How does a sinking fund forecast help the building maintenance programme?
It provides a written reminder for future maintenance and replacement work. Each forecast sets down an estimated time for the work to be carried out. This can be used as a schedule by the body corporate to remind them of the need for future work.

Does a sinking fund forecast mean the owners will have to pay more money in body corporate fees?
It may do. It may also mean the owners will pay less. Until a sinking fund forecast has been prepared, it is very difficult for a body corporate to know how much it should have in the fund at any particular time.

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