Long term maintenance plans (LTMPs) and the importance of long-term maintenance funds (LTMFs).

What is a Long-Term Maintenance Plan (LTMP)?

A LTMP is a planned maintenance strategy for bodies corporate.

A LTMP allows current owners and future owners to know what works are required to maintain the building asset, common property and commonly owned assets, as well as when the works are required. This in turn allows owners to be able to budget accordingly for these works without any big surprises.  

What types of things are covered in a LTMP?

• Building washes
• Lift replacement
• Roof replacement
• Repainting of the building
• Cladding replacement

Should my BC have a LTMP?

Yes, a body corporate is required by legislation to have a LTMP (section 116 Unit Titles Act 2010 (Act)). There is no ability to opt out of this requirement.

However, the requirement for the length of the LTMP varies depending on the size of the body corporate (BC).

A large BC (10 or more principal units) must have a LTMP that covers a period of at least 30 years from the date of the LTMP or the last review of the LTMP.  Unit Title Regulations 2011 section 30A.

A BC that is less than 10 principal units must have a LTMP that covers a period of at least 10 years.

How often should the LTMP be reviewed?

The LTMP must be reviewed every 3 years, however, if the BC becomes aware of any matter than may have a material impact on the LTMP, the LTMP must be reviewed as soon as practicable.

What is a Long-Term Maintenance Fund (LTMF)?

A LTMF is what funds the LTMP.

Does my BC need a LTMF?

Section 117 of the Act dictates that a BC must establish and maintain a LTMF unless the BC, by special resolution (75%), decides not to do so.

Recent changes to the legislation also mean that if the BC has decided not to establish the funds, the BC:

  1. Must review the decision annually; and

  2. May, by special resolution, decide to establish a fund.

Whether the BC should have a LTMF or not, is going to differ from BC to BC, as each BC has different needs.

For example, if the only common asset of the BC is a shared driveway, then the BC may consider it reasonable not to have a LTMF, and owners can pay for the maintenance of this driveway when it is needed.

However, for a 100-unit apartment complex with a swimming pool, gym and lifts, it is reasonable to have a LTMF.

Are there restrictions around how the LTMF can be used?

Yes, the BC can only use the LTMF for spending in relation to the LTMP; so, the BC cannot dip into this for other general BC expenditure, or unplanned expenditure. This is why reviewing the LTMP as soon as the BC becomes aware of any necessary maintenance is so important.

How much should be in my BC’s LTMF?

This is not black and white, as this is dependent on the needs of the BC.

It may be beneficial for a BC, when preparing a budget for the LTMF, to engage the assistance of specialists/professionals.

Why should unit title owners have to pay towards a LTMF?

Not having a LTMP/LTMF can impact the following:

• Re-saleability: purchasers see value in a well-maintained building, and a BC which has money in the kitty to pay for the necessary maintenance. Purchaser’s may be dissuaded from purchasing a unit title property where they know they will have to pay large levies for work that needs to be done in the near future, or they simply may not be able to finance this.
• Equitability: ensures that owners are paying for their use of the commonly owned property/commonly owned assets, rather than future owners who have not benefitted from the use of these and must pay for it down the line.
• Financial stability: allows owners to adequately budget for maintenance that needs to be done.

If you have any questions about LTMP or LTMF’s, please get in touch with our friendly property team.