Published by SSKB Strata Management | Trusted Owners Corporation management across Victoria
Construction costs are rising. Materials are more expensive. Labour is harder to secure. And the 2026–27 Federal Budget has confirmed these pressures are not easing anytime soon.
For Victorian Owners Corporation committees, this creates a specific and urgent risk: a maintenance plan built on pre-inflation cost estimates that no longer reflects what capital works will actually cost. The result, if left unaddressed, is a funding shortfall — and the financial shock of a special levy that nobody on the committee saw coming.
Whether your Owners Corporation is a large Melbourne apartment complex or a boutique suburban development, understanding your maintenance fund obligations — and whether your current position is sound — is one of the most important things a committee can do right now.
What Is an Owners Corporation Maintenance Fund?
In Victoria, the maintenance fund is the Owners Corporation’s long-term financial reserve for major capital expenditure on common property. It is Victoria’s equivalent of what other states call a sinking fund or capital works fund — though the legislative framework and obligations are specific to the Owners Corporations Act 2006 (Vic).
The maintenance fund exists to cover the kinds of large, planned works that cannot reasonably be funded from the day-to-day administrative fund. Typical expenditures include:
- Roof replacement or major repairs
- Lift upgrades, servicing, or replacement
- External painting and rendering
- Carpark resurfacing and line marking
- Pool and recreation facility refurbishment
- Façade repairs and waterproofing
- Common area refurbishment
- Replacement of major plant and equipment
Every lot owner contributes to the maintenance fund through their annual levy payments, based on the Owners Corporation’s approved budget. The amount levied is set at the Annual General Meeting (AGM), informed by the maintenance plan.
When the fund is adequately resourced and the plan is current, major works get done on time, levies are predictable, and owners are protected from financial shocks. When the fund is underprepared, the result is either deferred maintenance — with compounding costs — or a special levy that arrives without warning.
What Victorian Law Requires: The Tiered System
Victoria’s Owners Corporation obligations are structured around a five-tier system, introduced under the Owners Corporations and Other Acts Amendment Act 2021 and in effect from December 2021. Your tier is determined by the number of occupiable lots in your scheme — importantly, car parks and storage lots do not count toward the threshold.
| Tier | Occupiable Lots | Maintenance Plan Required? |
| Tier 1 | More than 100 lots | Yes — mandatory |
| Tier 2 | 51–100 lots | Yes — mandatory |
| Tier 3 | 10–50 lots | No — but recommended |
| Tier 4 | 3–9 lots | No — but recommended |
| Tier 5 | 2 lots or services only | No — but recommended |
Tier 1 and Tier 2 Owners Corporations are legally required under Section 36 of the Owners Corporations Act 2006 to prepare and approve a maintenance plan. Once approved, the Owners Corporation must establish a maintenance fund and ensure annual levies are adequate to fund it.
Tier 3, 4, and 5 Owners Corporations are not legally required to have a maintenance plan — but Consumer Affairs Victoria recommends one for all schemes, and for good reason. An Owners Corporation without a maintenance plan has no structured basis for anticipating major works costs or setting appropriate levies. Over time, this creates exactly the conditions that lead to special levies, owner disputes, and deteriorating buildings.
SSKB recommends a 10-year maintenance plan for all tiers, and a 15-year plan wherever practicable. A longer planning horizon gives committees greater certainty, supports more gradual and predictable levy adjustments, and reduces the risk of a funding shortfall when major works coincide.
Why the 2026 Federal Budget Makes This More Urgent
The 2026–27 Budget formally acknowledged what the construction industry has been managing for several years: ongoing global supply chain disruptions and rising material costs continue to place upward pressure on building and construction costs across Australia.
For Owners Corporation committees, this is not abstract economic commentary. It has a direct and practical effect on maintenance fund adequacy.
Here’s the problem: most maintenance plans use cost estimates at the time they were prepared. If your plan was completed two, three, or four years ago — before the most significant period of construction cost inflation — the figures it contains are likely to be materially understated compared to what those same works would cost today.
Consider a practical example. A Melbourne apartment complex that budgeted $180,000 for external repainting and facade remediation in 2023 may be looking at $220,000 to $260,000 for the same scope today, once current labour rates and material costs are factored in. If annual levies were set based on the 2023 estimate, the maintenance fund may be tracking toward a shortfall of $40,000 to $80,000 — with no-one on the committee yet aware of the gap.
At the point where the works are actually needed, that shortfall becomes a special levy. And special levies — particularly large, unexpected ones — create real financial hardship for lot owners, erode trust in committee governance, and can trigger disputes under the Owners Corporations Act that are costly and time-consuming to resolve.
The time to identify and close that gap is now, not when a contractor’s quote lands on the table.
The 5 Warning Signs Your Maintenance Fund May Be Underprepared
1. Your Plan Is More Than Three Years Old
Even for schemes where the plan doesn’t have a statutory review deadline, a plan prepared before 2023 is almost certainly working from a pre-inflation cost base. For buildings of any meaningful size, a three-year threshold is a more prudent trigger for review than waiting until a problem becomes obvious.
2. You Are Tier 1 or Tier 2 and Have Not Reviewed Your Plan Since the 2021 Reforms
The 2021 amendments to the Owners Corporations Act changed the maintenance plan framework significantly. If your plan was prepared under the pre-2021 rules and hasn’t been reviewed in the context of the updated obligations, it may not fully reflect current requirements.
3. Major Unplanned Works Have Been Completed Since the Last Plan
Emergency or unplanned expenditure — storm damage, unexpected structural repairs, urgent plant replacement — can deplete the maintenance fund significantly faster than the plan assumed. If your scheme has had significant unplanned works in the past 12–18 months, the plan should be reviewed to confirm the fund remains on track.
4. Levies Have Remained Flat While the Building Has Aged
Older buildings generally require progressively more capital expenditure — more systems are reaching end of life, more surfaces need attention, more infrastructure needs upgrading. If maintenance fund levies have remained at similar levels for several years while the building has aged, the fund is almost certainly falling behind what the building will need.
5. Your Tier 3, 4, or 5 Owners Corporation Has No Maintenance Plan at All
While not legally mandated below Tier 2, the absence of a maintenance plan means there is no structured basis for anticipating major works or setting levies accordingly. Without a plan, the only mechanism for covering unexpected large expenditure is a special levy — which is exactly what a well-managed fund is designed to prevent.
Your Maintenance Fund Health Check
Use this quick reference to assess where your Owners Corporation currently stands.
| Check | What to Look For | Action if No |
| Plan exists | Does your OC have an approved maintenance plan? | Commission one — especially Tier 1 & 2 |
| Plan age | Prepared within the last 3 years? | Commission a new plan |
| Tier compliance | If Tier 1 or 2, is the plan formally approved? | Approve at next AGM |
| Cost assumptions | Updated to reflect post-2022 construction costs? | Request updated cost assessment |
| Post-works review | Reviewed after any major unplanned expenditure? | Review before next AGM |
| Levy alignment | Annual levies consistent with plan recommendations? | Raise at next AGM |
If you answered No to two or more of these checks, your maintenance fund warrants prompt attention — before the gap between what you have and what you need becomes wider.
What Committees Should Do Now
Step 1: Confirm your tier. Count your scheme’s occupiable lots (excluding car parks and storage lots). This determines your legal obligations.
Step 2: Request your current maintenance plan. If you are Tier 1 or 2, your manager should have this on file. If you are Tier 3–5 and don’t have one, now is the time to commission one.
Step 3: Check when it was prepared and what cost assumptions were used. A plan prepared before 2023 that hasn’t been revised is likely working from a fundamentally different cost environment. Treat this as a priority discussion at your next AGM.
Step 4: Assess whether the fund balance is tracking to plan. Compare your current maintenance fund balance against what the plan projected for this point in time. A significant shortfall is a red flag that needs addressing before it compounds further.
Step 5: Commission a new plan if warranted. The cost of a new maintenance plan is modest relative to the works it forecasts and the risk it mitigates. For Tier 1 and Tier 2 schemes especially, this is not a discretionary expense.
Step 6: Set levies correctly at your next AGM. Once you have a current, accurate plan, the committee has both a legal and ethical obligation to set levies in line with its recommendations. Artificially low levies are a false economy — the shortfall accumulates and the eventual correction is more painful than incremental adjustments would have been.
The Real Cost of Getting This Wrong
The consequences of an underfunded maintenance fund are not abstract:
- Special levies that land unexpectedly, sometimes in the thousands of dollars per lot
- Deferred maintenance that compounds — a $30,000 repair ignored becomes a $90,000 remediation
- Owner disputes about financial management and levy adequacy, potentially escalated to VCAT
- Reduced property values in buildings with known maintenance backlogs
- For Tier 1 and 2 schemes, regulatory exposure for non-compliance with maintenance plan obligations
In the current construction cost environment, the risk of underestimating future capital works costs is higher than it has been in years. Committees that act proactively — reviewing plans, updating cost assumptions, and setting levies prudently — are protecting their owners from exactly this outcome.
Download SSKB’s Free Maintenance Fund Health Check Guide
Not sure where your Owners Corporation stands? SSKB has prepared a plain-English guide for Victorian owners corporation committees — covering your legal obligations under the Owners Corporations Act 2006, how the tier system affects your requirements, how to assess your current plan, and when to commission a new one.
It’s free, practical, and specific to Victoria.
Download the Maintenance Fund Health Check Guide →
Or speak directly with an SSKB owners corporation manager about a review of your scheme’s financial position.
This article is general information only and does not constitute financial or legal advice. Victorian owners corporation requirements are governed by the Owners Corporations Act 2006 (Vic). For advice specific to your scheme, please consult a qualified owners corporation manager or financial adviser.