What is a sinking fund forecast and why does it matter?

A sinking fund forecast is a 10-year plan that projects the major capital expenditure a body corporate scheme is likely to incur — things like repainting, roof replacement, resurfacing driveways, and replacing pool or lift equipment. The BCCM Act requires most schemes to have a current sinking fund forecast prepared by a suitably qualified person, typically a quantity surveyor or building consultant. The forecast is used to set the sinking fund levy at a level that will accumulate sufficient funds when major works fall due. A scheme that has consistently set its sinking fund levy too low will face large special levies when major repairs are needed. When buying into a scheme, always review the sinking fund forecast and the current balance — a large forecast liability against a small fund balance is a warning sign. This article is general information only and not legal advice.