NSW: 1 April - Levy Certification & Mandatory Maintenance

The framework governing the handover of new strata schemes in New South Wales is undergoing a significant shift.

From 1 April 2026, the Strata Schemes Legislation Amendment Act 2025 introduces more rigorous standards for the disclosure and certification of maintenance and capital works fund planning.

These reforms are designed to address ‘gaps’ in the transition from developer control. For a committee, understanding these new requirements is the first step in ensuring the long-term structural and financial viability of your scheme.

The Mandatory Standard for Maintenance (IMS)

The era of inconsistent, bare-minimum maintenance schedules is ending. The NSW Government has introduced a standardised form for the Initial Maintenance Schedule (IMS) to ensure that committees have a clear, enforceable roadmap for the upkeep of common property.

Key Statutory Requirements:

Prescribed Format: Developers must use the official NSW form for any scheme with a first AGM on or after 1 April 2026.

Granular Disclosure: The IMS must now detail the frequency of inspections, estimated costs at the time of completion, and provide all necessary manufacturer warranties and manuals.

The 10-Year Forecast Link: This schedule is no longer a standalone document; it is the essential data set required to produce a compliant 10-year capital works fund forecast.

Independent Certification for Multi-Storey Schemes

To mitigate the risk of initial lower levies—which often lead to significant special levies in the second or third year—the law now mandates independent surveyor certification for buildings exceeding two storeys.

Before the first AGM, a qualified, independent Quantity Surveyor (certified by AIQS or RICS) must review the developer’s figures and certify that:

The IMS is complete and compliant with the standard form.

The levy estimates for both the administrative and capital works funds are adequate to meet the actual expected expenses for the scheme’s first year.

This certification must be served on the owners corporation at least 14 days prior to the first AGM.

Statutory Penalties and Compliance

The 2025 reforms carry significant weight. Developers who fail to provide compliant documentation or meet the 14-day disclosure window face penalties of up to $11,000, with additional daily fines for ongoing breaches. For committees, these penalties serve as a powerful lever to ensure the developer provides the necessary information to manage the scheme effectively.

Practical Implications for the Strata Committee

Verifying the handover, the committee’s role at the first AGM is to ensure the lawful and orderly transfer of governance. This involves:

Audit of Disclosure: Confirming that the IMS and the independent certification report were received within the statutory 14-day window.

Assessing Independence: Verifying that the certifying surveyor has no disqualifying connection to the developer or original owner.

Levy Adequacy: Using the certified report to challenge any initial budget that appears insufficient for the building’s operational reality.

Mitigating Post-Completion Risk

A flawed IMS or an inadequate initial budget is often the reason for a building defect dispute or a financial shortfall. By insisting on strict adherence to these new standards, committees can protect themselves from the large special levies that has plagued many new developments.

This post appears in Strata News #784.

Adrian Mueller
JS Mueller & Co Lawyers
E: adrianmueller@muellers.com.au
P: 02 9562 1266