NSW strata legislation is undergoing its most significant reform phase in decades. Between 1 July 2025 and 1 April 2026, new laws will reshape how strata buildings are planned, funded, maintained, and handed over — with far-reaching consequences for owners corporations, strata committees, developers, and professional advisers.
At the heart of these reforms is a clear policy objective; to end chronic underfunding, improve transparency, and ensure strata buildings are financially sustainable from day one.
For too long, owners have borne the cost of optimistic assumptions made at the development stage. The new framework aims to rebalance that equation by introducing independent oversight, standardised planning, and stronger accountability.
Below is a detailed breakdown of what’s changing, why it matters, and what strata stakeholders should be doing now.
Independent Certification of Initial Maintenance Schedules (Commencing 1 April 2026)
Initial Maintenance Schedules (IMS) play a critical role in setting the financial trajectory of a strata scheme. They inform early levy setting and underpin long-term capital works planning.
Historically, many IMS documents — particularly those prepared for complex, high-density developments — have materially underestimated true maintenance costs.
Commonly under-allowed elements include:
- Building façades and waterproofing systems
- Mechanical services (HVAC,Lifts, BMS)
- Fire and life-safety systems
- Shared amenities such as pools, gyms, podiums, and rooftop areas
From 1 April 2026, all new multi-storey strata developments must have their IMS along with their initial budgets independently certified before the first Annual General Meeting.
Why this reform matters
- It removes the conflict of interest inherent in developer-prepared schedules
- It creates a defensible, evidence-based foundation for levy setting
- It significantly reduces the likelihood of early-stage funding shortfalls
What it changes in practice
- Owners corporations inherit buildings with realistic cost expectations
- Committees can plan proactively instead of reacting to defects and cash shortfalls
- Disputes between owners and developers are reduced by clearer documentation
This reform represents a structural shift: financial realism is no longer optional.
Standardised 10-Year Capital Works Fund Plans: (From 1 July 2025, fully enforceable by 1 April 2026)
Capital Works Fund Plans (CWFPs) have long varied widely in quality, scope, and reliability. Under the new legislation, NSW Fair Trading will mandate a standardised 10-year CWFP format, ensuring consistency across the strata sector.
Key new requirements
All CWFPs must now:
- Cover a minimum 10-year forward planning horizon
- Identifyspecific capital works items, not generic allowances
- Clearlystatehow each item will be funded, including:
- DetailRegular levy contributions
- Any ProposedSpecial levy allowances
- External funding or grants (where applicable)
- Align with the IMS for newly registered schemes
- Undergo independent verification for new and multi-storey developments
Why this matters:
- Reduces reliance on vague or overly optimistic forecasts
- Minimises “surprise” special levies that destabiliseownerscorporations and individual owners financial positions.
- Improves confidence for purchasers, lenders, and insurers
- Enables committees to make informed decisions about timing and prioritisationof capital works
In effect, CWFPs are moving from a compliance document to a core financial governance tool.
Stronger Developer Obligations at Strata Handover
The handover from developer to owners corporation is one of the most vulnerable stages in a strata scheme’s lifecycle. Understanding the difference between strata managers and building managers can also help clarify the responsibilities involved during building operations and maintenance.
At the first AGM, developers must now supply:
- A complete andaccurateIMS
- Transparent documentation supporting initial capital works levy calculations
- Evidence of independent certification or verification (whererequired)of the IMS and initial budget estimates
The practical impact:
- Owners receive a clearer snapshot of future maintenance obligations
- Committees can adopt realistic levy structures earlier
- Financial misalignment isidentifiedbefore it becomes entrenched
This reform closes long-standing gaps that allowed underfunding to persist well into a building’s early years.
Broader Regulatory Context: Enforcement and Accountability
These reforms sit alongside expanded NSW Fair Trading enforcement powers, including:
- Increased scrutiny of maintenance planning and compliance
- The ability to issue compliance notices and penaltiesfor poorly maintained and funded owners corporations
- Stronger expectations around record keeping and transparency
The regulatory signal is clear: poor planning and underfunding are no longer acceptable industry norms.
What Developers and Building Owners Should Be Doing Now
With the commencement of new reforms approaching, proactive preparation is essential.
Developers should:
- Reassess development-stage maintenance assumptions
- Engage independent experts early toreview and advise on IMS requirements toavoid compliance risks
- Prepareto obtain independent certification of the required IMS andbudgets at building handover
- expectmore robust scrutiny from the new building owners at handover and the First AGM
Owners corporations should:
- Review existing Capital Works Fund Plans to ensure realistic and adequate forecasting, with guidance from experienced strata managers who understand the practical implications of the upcoming reforms.
- Seek expert independent advice before funding shortfalls emerge
- Understand how capital works fund planning requirements will apply to their scheme
Early action will reduce risk, cost, and disruption once the reforms are fully in place and being enforced.
Supports for Compliance and Long-Term Sustainability
The new strata framework places independent, technically grounded advice at the centre of compliance.
Mitchell Brandtman’s Quantity Surveying team supports:
- Independent certification of Initial Maintenance Schedules
- Preparation and verification of 10-year Capital Works Fund Plans
- Long-term maintenance forecasting and levy modelling
- Strategic advice forownerscorporations, committees, and developers
The 2025–2026 reforms mark a clear shift in the NSW strata landscape — from optimistic forecasting to evidence-based planning, from minimal oversight to independent certification, and from reactive funding to long-term financial sustainability.
For developers, owners corporations and committees, the message is simple: preparation cannot wait until compliance deadlines arrive. Reviewing maintenance assumptions, strengthening capital works planning, and seeking independent advice now will reduce risk, avoid disruption, and position schemes for stability well into the future.
The reset is underway. Those who plan early will be best placed to navigate what comes next.
If you are preparing for the upcoming reforms or would like an expert review of your maintenance schedules and capital works planning, our team can provide the independent advice and technical expertise needed to support a financially sustainable and compliant strata scheme. Contact us today to find out what we can do for you.