It is now just over five years since the Unit Titles Act 2010 came into force in New Zealand. With the introduction of the Unit Titles Act 2010, it became mandatory for every unit title development in New Zealand to have written long-term maintenance plan (LTMP) regardless of the size of the development. Due to the onerous nature of this new legislation, the government allowed a grace period for bodies corporate to arrange for the LTMP to be provided.
THE LEGAL PART
- A body corporate must establish and regularly maintain a long-term maintenance plan.
- A long-term maintenance plan must cover a period of at least 10 years from the date of the plan or the last review of the plan.
- The purpose of a long-term maintenance plan is to—(a) identify future maintenance requirements and estimate the costs involved; and(b) support the establishment and management of the funds; and(c) provide a basis for the levying of owners of principal units; and(d) provide ongoing guidance to the body corporate to assist it in making its annual maintenance decisions.
These are the minimum legal requirements for any LTMP for a unit title development to contain. As with most legislative wording, the requirements are broad and do not go into particular detail of how the plan should be presented and what particular data should be captured. The basis for calculating future maintenance is also not specified in the act.
WHAT SHOULD BE IN THE PLAN?
The contents of a LTMP should include each building element that would be normally subject to maintenance during the life of the building and generally under the following headings:
- The common property (e.g. common landings/lobbies, entrance foyers, grounds, pools).
- The building elements (e.g. roof, cladding, joinery).
- The infrastructure (e.g. plumbing, electrical, ventilation, emergency equipment, security etc.).
An important caveat to the above however is that the body corporate can opt out of maintaining any particular items that they choose by AGM/EGM but these items will need to be identified in the plan.
Each of the building elements recorded on site (preferably by an experienced chartered or registered building surveyor), are assessed for typical life cycle based on the current condition/maintenance regime and other on-site data (exposure, location, material used etc) and added to an inventory. This inventory then forms the basis for calculating the LTMP.
It is also important to note that long term maintenance plans do not include maintenance items that are required on a more regular (once a year or greater) basis such as window cleaning, electrical inspections, lift maintenance, building wash etc. These are specifically excluded from this legislation.
So, without the benefit of a crystal ball, how do you calculate when a particular building element will require maintenance or replacement?
NO CRYSTAL BALL?
There are a number of tools available for us to calculate the approximate maintenance or replacement period of a particular building element. The Royal Institution of Chartered Surveyors has produced a comprehensive guide to the life expectancy of building components that gathers data on a number of building elements based on the experience of building surveyors.
The guide was produced to provide ‘in the field’ data on life expectancy, rather than rely on laboratory testing data, and provides a life expectancy range based on environmental conditions, design, construction, quality of materials etc. This is assessed by carrying out a desk top study and on-site evaluation of the building.
Experienced surveyors carry out on-site analysis of each building element, recording its current condition, maintenance regime (or lack of), quality of construction and whether any defects exist that require more immediate attention.
There are also other important considerations to make when reviewing a buildings maintenance requirements such as; does the particular building element comply with current legislation?, is it economic to replace the particular building element (even though it has not reached its life expectancy), is there more superior technology for a particular building element that would mean replacement is desirable (particularly with building services) etc
So now that you have assessed when a particular building element should be maintained or replaced, what else should be included in the plan?
Under section 116 (part 3), the plan should also estimate the costs involved in the maintenance of the building and assist the body corporate to establish a fund (although as in section 117 (1), the body corporate can, by special resolution decide not to set up a fund at all) and provide a basis for levying owners.
Replacement or maintenance costs for each building element are assessed using our own in house database of elemental rates compiled by our team of professional quantity surveyors. This is based on current market rates for each region and is regularly updated which is particularly important in the present ever-changing construction market. We then calculate average construction price inflation to our cost model to give an estimate of replacement cost at the time the particular building element is due to expire .
The most accurate cost data however is always to seek pricing from tendering contractors at the time the replacement/maintenance becomes due and pricing contained with the plan should be used as a guide only.
Once the costing exercise is complete, the plan also calculates an indicative levy total for each year for the body corporate to consider.
Section 117 of the act provides further details of the requirements of a fund:
(1) A body corporate must establish and maintain a long-term maintenance fund unless the body corporate, by special resolution, decides not to establish a long-term maintenance fund.
(2) The fund may only be applied towards spending relating to the long-term maintenance plan.
(3) The body corporate must, by special resolution, approve
any amount to be spent on any one maintenance item if the amount exceeds the amount specified for that item in the long-term maintenance plan by more than 10%.
As described in section 117 above, there are restrictions on the use of the fund, and it cannot be used to fund anything other than what is included in the plan (ie, cannot be used to fund improvements or other work outside of the plan). How often should you have the plan reviewed?
With older or more complex buildings, we would recommend reviewing the plan at shorter intervals to ensure accuracy of the replacement and cost data.
Are long term maintenance plans just for body corporates?
Absolutely not. Of course it is only unit title developments that are subject to the unit titles act but the concept of long term maintenance planning is transferable to all types of built asset. We have been involved in providing plans for warehouse buildings, offices, aged care facilities, retail premises etc.
As with all property decisions, it pays to talk to an expert. The legislation was essentially put in place to avoid properties being put into disrepair by lack of, or poorly thought out, maintenance decisions. By engaging an expert such as a chartered or registered building surveyor to produce the long term maintenance plan, the client is getting a breadth of experience in building related issues and practical advice on building maintenance. In the long run, a well maintained building provides a safe building environment, minimises defects and retains (or even enhances) its value.