The sinking fund maths: what airspace income actually does to levies

Start from the ten-year plan, not the windfall

Every scheme has a capital works forecast: membrane replacement, lift refurbishment, façade remediation, fire upgrade. Airspace proceeds are most persuasive when mapped directly against those line items — "this funds the 2029 lift and the roof membrane" beats "the building receives $1.4m".

Worked example: 420 m² Sydney strata roof

Take a strata building with a 420 m² usable roof and a capital works forecast of $2.1m over ten years, currently funded by $3,400 per lot per year across 38 lots.

A sale-of-airspace model that nets the scheme roughly $1.3m after costs covers about 62% of the forecast. Applied evenly, that reduces the annual capital works levy per lot from about $3,400 to roughly $1,290 for a decade — the number owners actually respond to.

A retain-and-lease model produces a smaller annual figure but leaves the new lots on the scheme's roll, growing the levy base permanently. Neither is automatically better; see our sell vs retain comparison.

Don't forget the costs that sit inside the scheme

Model these before quoting a net figure to owners:

• Legal, survey and subdivision registration
• Strata manager and committee time, plus independent valuation advice
• Any structural strengthening not borne by the developer
• Increased insurance replacement value and the revised entitlement schedule
• GST treatment and possible income tax on proceeds — get scheme-specific advice

The valuation effect on existing lots

A funded capital works plan, a new lift and an upgraded roof typically lift existing lot values. Loss of roof access or shared amenity works the other way. Present both, and let owners weigh them — committees discount presentations that show only upside.

How to present it at the meeting

One page: current levy, proposed levy, what is funded, what is given up, and the decision being asked for. Attach the feasibility model as the supporting document rather than the headline.