How to calculate and allocate the reserve fund for your sectional title scheme
Our website provides comprehensive information that addresses common queries about the reserve fund. In this article, we will provide a guide on how to calculate your body corporate’s reserve fund.
Discover the Mirfin Dashboard, our online platform that automates the updating of your levies when modifications are made to your reserve fund.
Creating a reserve fund is an essential part of the financial planning process for a body corporate. To establish a reserve fund, the body corporate should first identify all common property assets that require major repairs or replacements over the long term. This is achieved through a building inspection where detailed inventory is taken of all common property assets. Once the list of required major works is determined, the body corporate should estimate the cost of each item and create a long-term maintenance plan outlining when each item will need to be replaced and how much money will be required.
The reserve fund should be established by setting aside a portion of the levies collected from members each year. The amount to be set aside will depend on the expected cost of the major works identified in the long-term maintenance plan. It is important to ensure that the reserve fund is adequately funded, as underfunding can lead to special levies or borrowing to cover the costs of major works. The reserve fund should also be managed prudently, with investments that are secure, liquid, and easily accessible.
Expenses that should be allocated to the reserve fund include all major capital expenses that are expected to occur in the future, such as the replacement of roofs, lifts, or air conditioning systems, as well as major renovations or upgrades to common areas. It is important to note that the reserve fund should not be used to cover routine or ongoing expenses that should be paid for from the admin fund. Instead, the reserve fund should be used to cover major, irregular expenses that require significant funds and can be anticipated over the long term. It is important to regularly review the 10-year maintenance plan and adjust the reserve fund contributions accordingly, to ensure that the body corporate is adequately funded to meet the future major works expenses.
By establishing a reserve fund and allocating expenses appropriately, a body corporate can help to provide financial stability and certainty for owners and ensures that the property is well-maintained over the long term. A well-funded reserve fund also helps to maintain property values and reduces the risk of unexpected costs, providing peace of mind for owners.
Discover the Mirfin Dashboard an online platform that automates the updating of your levies when modifications are made to your reserve fund.
Our website provides comprehensive that addresses common queries about the reserve fund. In this article, we will provide a guide on how to calculate your body corporate’s reserve fund.
Discover the Mirfin Dashboard, our online platform that automates the updating of your levies when modifications are made to your reserve fund.
Creating a reserve fund is an essential part of the financial planning process for a body corporate. To establish a reserve fund, the body corporate should first identify all common property assets that require major repairs or replacements over the long term. This is achieved through a building inspection where detailed inventory is taken of all common property assets. Once the list of required major works is determined, the body corporate should estimate the cost of each item and create a long-term maintenance plan outlining when each item will need to be replaced and how much money will be required.
The reserve fund should be established by setting aside a portion of the levies collected from members each year. The amount to be set aside will depend on the expected cost of the major works identified in the long-term maintenance plan. It is important to ensure that the reserve fund is adequately funded, as underfunding can lead to special levies or borrowing to cover the costs of major works. The reserve fund should also be managed prudently, with investments that are secure, liquid, and easily accessible.
Expenses that should be allocated to the reserve fund include all major capital expenses that are expected to occur in the future, such as the replacement of roofs, lifts, or air conditioning systems, as well as major renovations or upgrades to common areas. It is important to note that the reserve fund should not be used to cover routine or ongoing expenses that should be paid for from the admin fund. Instead, the reserve fund should be used to cover major, irregular expenses that require significant funds and can be anticipated over the long term. It is important to regularly review the 10-year maintenance plan and adjust the reserve fund contributions accordingly, to ensure that the body corporate is adequately funded to meet the future major works expenses.
By establishing a reserve fund and allocating expenses appropriately, a body corporate can help to provide financial stability and certainty for owners and ensures that the property is well-maintained over the long term. A well-funded reserve fund also helps to maintain property values and reduces the risk of unexpected costs, providing peace of mind for owners.
Discover the Mirfin Dashboard an online platform that automates the updating of your levies when modifications are made to your reserve fund.
Manage your reserve fund on the Mirfin Dashboard
