Practical Steps To Get Your Strata Committee Ready To Borrow

If your building needs serious work – defects, waterproofing, cladding, lifts, solar or common‑area upgrades – your strata committee must get loan‑ready long before you talk to a lender. Getting your strata committee ready to borrow means: (1) defining the works and budget, (2) modelling how different funding options hit levies, and (3) lining up resolutions and documents so the owners corporation can approve a strata loan without chaos.

Use this as a practical checklist. The goal is a decision‑ready funding proposal that owners can vote on confidently at the next general meeting.

Start with the building’s real needs and detailed reports before chasing finance.

1. Start With The Building, Not The Loan

Strata finance should follow the building’s needs, not the other way round. Lenders, regulators and owners will all ask the same questions: what’s wrong, what will it cost to fix, and how robust is the plan?

1.1 Diagnose the problem properly

Before talking money, your committee should:

• Gather recent reports: defect reports, fire safety, cladding, engineer or consultant reports.
• Confirm what’s urgent (safety, water ingress) versus what’s strategic (upgrades, solar, EV chargers).
• List legal or compliance deadlines (fire orders, cladding notices, council requirements).

For urgent fire, cladding and safety works, cross‑check with the guidance in How To Fund Urgent Fire, Cladding And Safety Fixes Fast so you’re realistic about timelines and regulatory pressure.

1.2 Define the project scope(s)

Avoid going to owners with a vague “we need a loan for building works”. Instead, define 1–3 clear project scenarios:

• Minimum compliance scope – what you must do to meet safety and legal requirements.
• Recommended scope – compliance plus sensible longevity works (e.g. combined waterproofing and facade repairs).
• Aspirational scope – adds value‑add items like lobby upgrades, energy efficiency or EV infrastructure.

For each scenario, ask your consultant or strata manager to estimate:

• Total project cost (including contingency, design, approvals and project management).
• Likely staging (single contract vs staged works over 2–3 years).
• Construction timing and disruption.

1.3 Build a realistic budget (with contingency)

Owners and lenders are wary of under‑cooked budgets. Your working budget should include:

• Builder/contractor cost estimates
• Professional fees (engineer, architect, project manager, certifier)
• Statutory fees and approvals
• 10–20% contingency (often higher for complex defect or cladding jobs)
• Insurance or additional supervision costs

For anything involving solar, batteries or EV chargers, stress‑test the promised energy savings as suggested in How To Fund Solar, Batteries And EV Chargers In Strata Buildings: assume savings are at least 20% lower than quoted so your loan remains affordable even if the system under‑performs.

2. Map Your Funding Options Before You Talk Loans

Once you know “what” and “how much”, the next step is “how will we pay for it?”. Before landing on strata finance, your committee should compare at least two realistic funding mixes.

2.1 Core funding options for building works

Most schemes use a mix of:

• Existing capital works funds – cash already saved in the sinking fund.
• Increased ongoing levies – to rebuild reserves or fund staged works.
• Special levies – one‑off or staged, owner pays from savings or personal loans.
• Strata building loan – owners corporation borrows as a group, repaid from levies.

The right mix depends on:

• Size of the project relative to your annual levies and capital works fund
• Owner mix (investors vs owner‑occupiers; high vs low income)
• Urgency (defect or fire safety vs nice‑to‑have upgrade)

2.2 Model levy impact per lot – clearly

From our guide Strata Building Loans In Australia: What Really Happens Step‑By‑Step, one of the most effective ways to get owner buy‑in is clear per‑lot modelling of levy impacts under different options.

For each scenario, show:

• Per‑lot special levy (once‑off or staged)
• Per‑lot extra quarterly levies if using a loan
• Timeframe – how many years until the loan is expected to be repaid

Use simple tables and graphs. Owners need to see “what does this mean for my cashflow?” not just big building totals.

2.3 Worked example: levies vs loan

Assume:

• 40‑lot building
• $1,600,000 total project cost
• $400,000 capital works fund already saved
• $1,200,000 to be funded

Option A – Special levy only
$1,200,000 ÷ 40 lots = $30,000 per lot (before adjusting for unit entitlements). If collected over two instalments in 12 months, that’s $15,000 per instalment per average lot.

Option B – Strata loan over 10 years
Indicative loan: $1,200,000 over 10 years, principal and interest.

If we assume an indicative rate of 8.0% p.a. (for illustration only):

• Annual repayment ≈ $180,000–$190,000
• Say $187,000 ÷ 40 lots ≈ $4,675 per lot per year
• ≈ $1,169 per quarter per lot (again, before exact unit entitlement splits)

Instead of finding $30,000 in a year, each owner faces about $1,100–$1,200 extra per quarter for 10 years. This kind of comparison helps owners see which option they can realistically manage.

2.4 Comparison table: cash vs strata loan

You’re not choosing for eternity. A future committee can refinance or restructure once the building is de‑risked – see Refinance Or Restructure Your Strata Building Loan The Smart Way for how that works.

Clear per-lot levy modelling helps owners compare special levies and strata loans.