The seven things that you should have in your LTMP
These are the seven things you need to include in your LTMP for it to be compliant and to create a document that becomes a genuinely useful planning tool.
The administrative details
Your plan needs to have a start date and a duration or term.
Each copy should also state whether or not it is a draft - yet to be approved by the body corporate - and once it has been approved, the plan should say as much and also record when that decision was made. Otherwise when someone grabs a copy, how do they know what version it is?
It’s also a requirement of the legislation that the plan records “who prepared the plan”. But it is more effective to state who last made changes to the plan.
A description and condition assessment of all building items, infrastructure and common property
Your plan should have a list all of the items in your development and explain what maintenance, if any, each will require during the period covered by your plan.
Some items won't need maintenance but they should still be included and described, otherwise it could easily be assumed they have been overlooked.
A full description of each item will also be helpful in the future when you or someone else wants to know the colour, standard or model etc of any particular element.
What items you want to include and what you want to leave out
You have the choice of including items in your plan that the body corporate would otherwise not be required to maintain. Then, on the other hand, the body corporate can opt out of maintaining any item, that would normally be required to be included in the plan.
This provision is useful for allowing the body corporate to maintain what would normally be the responsibility of each owner and vice versa. The requirements of legislation are often misunderstood in this area and some owners can get concerned if they think they are paying for something they shouldn’t. So it can help if any areas that might be regarded as grey are listed in your LTMP with the body corporate’s position clearly noted.
But the main takeaway from this is that the body corporate can decide whatever they want to do when it comes to maintenance, provided any variation from the legislation is approved at a general meeting and is recorded in the plan.
There's more information here in this article titled What shoud be in your LTMP
The age, life and cost of replacement of each item
It is a mandatory requirement of the legislation that age, life and cost of replacement of each building item, each item of infrastructure and all common property is recorded in your plan.
While it’s not hard to figure why the legislators wanted these values recorded, arguably it’s overkill and even pointless in a well considered and well prepared plan.
But it is a requirement so you need to create a list or table, or find some other way to summarise these values.
The cost of maintenance of each item
The cost of maintaining each item is the starting point for any long-term maintenance plan.
You do this by working through what maintenance needs to be done and prepare a list with the estimated cost for each job in each year. This isn’t too hard if you approach it systematically and break your development up into building items such as the roof and cladding, infrastructure such as electrical systems and plumbing and common property such as the lobby and gardens.
For readability it makes sense to have a list of all of the jobs and their cost in each year along with an explanation of why it should be done and how the estimate was reached and then summarise the costs in a simple table for owners to review and approve.
Presentation of this section is important so your owners can easily see what is planned and what it will cost.
The amounts you are going to set aside for your long-term maintenance fund
Your plan should contain a funding table that can be best described as a forecast of the cash required to fund the long-term maintenance you are planning to carry out.
You can expect that your owners would prefer that the levies don’t fluctuate up and down, so you should use a reserve to provide a buffer. Then it’s the balance of the reserve that fluctuates. You obviously need to build it up first and it might be that you need to increase levies earlier in your plan. But the idea is that you should be squirrelling away cash in advance. And especially for those one-off big jobs.
This table should be toward the front of your plan, even as an executive summary, because it’s the first thing owners will want to know. i.e. "How much is this going to cost me?"
Whether or not you have a Long-Term Maintenance Fund
It is the body corporate’s choice whether or not to have a Long-Term Maintenance Fund but the way the unit titles legislation is worded, each body corporate automatically has one unless it has opted out. So if you don’t want to have a Long-Term Maintenance Fund (as defined in the legislation) and haven’t yet passed a resolution at an AGM or EGM to opt out, you probably should do this at your next AGM.
Then whether or not you have a Long-Term Maintenance Fund must be recorded in your plan and preferably when the decision was made. This is because you only need to do it once and don’t want to have to go back through old AGM minutes to confirm that the resolution has been passed.
It needs to be appreciated that while having a cash fund or reserve for maintenance is highly recommended, the long-term maintenance fund - as defined in the legislation - restricts to how your money can be spent. For that reason, many body corporates have - wisely - decided to opt out of having a fund and given their cash reserves an alternative name such as “maintenance reserve”. This small step grants them flexibility on how they can manage their own cash reserves.
If you're interested in learning more about this we've published a paper called fund or no fund?
Prepared by: John Bradley. August 2016