A Long Term Maintenance Plan (LTMP) is intended to extend the life of a building through sensible planning and timely execution of maintenance. Too often though, LTMPs end up being a âtick box exerciseâ to comply with the Unit Titles Act, or the results are too hard to deal with, meaning a lost opportunity for the property owners, not to mention wasted expenditure.
This can be avoided when the LTMP is tailored to suit the individual ownersâ needs. A strategic LTMP is more likely to be implemented, and will ultimately add value by protecting the condition, performance and value of the property.
What is a Long Term Maintenance Plan (LTMP)?
An LTMP looks at the whole of a building on an element-by-element basis, which includes things like the roof, elevations, joinery, floor finishes and heating systems. It assesses the condition of each element and forecasts when large scale maintenance such as refurbishment or replacement is likely to be required, along with the estimated cost.
In the case of Body Corporates, LTMPs are a requirement under the Unit Titles Act 2010. The LTMP will usually cover the common parts of the building that the Body Corporate is responsible for, and not the areas which are the individual ownersâ responsibility (i.e. within the units). It usually focuses on significant maintenance items and excludes routine maintenance like weekly cleaning contracts.
The LTMP contains a table of elements and sub-elements, with an estimate of how quickly each element will degrade, when it might fail, and what expenditure will be necessary to maintain, repair and replace each element, with the aim of undertaking preventative works before a failure occurs. Forecast expenditure is assigned to the year when maintenance is to be undertaken, which can then be used to set Body Corporate levies for each year.
What timespan should an LTMP cover?
LTMPs generally cover a period of 10 to 30 years. Since the Unit Titles Amendment Act 2022, larger Unit Title properties of more than 10 units are required to have a 30-year plan, and have it professionally reviewed every three years. Smaller properties must have at least a 10-year plan.
The Unit Titles Act also imposes a requirement to review the LTMP at least every 3 years, and because of the unpredictability of building performance, weather events and cost inflation, the independent three-yearly review is critical to the proper function of an LTMP. For large and complex structures, even more frequent reviews may be advisable.
Proactive building maintenance vs. reactive repairs
Most property owners have the best intentions when it comes to maintaining their property, and can see the value in being proactive, rather than dealing with expensive failures when they occur. After all, failures in critical building elements usually occur at the worst possible time and when they are needed most: roofs leak when the rain is heaviest; heating systems tend to fail at the coldest time of year.
Repair costs tend to escalate in an emergency too, as there is little time to seek competitive quotes, or take advantage of economies of scale with larger planned works, and availability of materials and trades people can be limited at short notice. Add to that the potential cost of a building being uninhabitable while emergency works are arranged and carried out, and the appeal of sensible, planned building maintenance becomes very clear.
- Reactive or Deferred Maintenance is the default strategy, where works are only undertaken when required. This can mean periods of time where there is little expenditure, but carries the risk of interruption to the buildingâs use, increased costs for emergency works, and a backlog of maintenance that makes the building unattractive to potential buyers and tenants.
- Planned Preventative Maintenance (PPM) is a proactive strategy where maintenance is planned so that works can be undertaken to prolong the life of a building element, or replacements can be undertaken before the element fails. Budgets can be more accurately planned, works can be scheduled and aligned for best value, and the risk of interruption to the buildingâs normal use can be reduced.
Repair costs tend to escalate in an emergency too, as there is little time to seek competitive quotes, or take advantage of economies of scale with larger planned works, and availability of materials and trades people can be limited at short notice. Add to that the potential cost of a building being uninhabitable while emergency works are arranged and carried out, and the appeal of sensible, planned building maintenance becomes very clear.
It might seem like a reactive approach is less costly by offering low annual levies, and it is possible to keep building elements ticking along with low-cost, short-term repairs. But – in the example of an old and leaking roof – eventually those repeated leaks will become more frequent, with increasing negative impacts, and one day the whole roof will have to be replaced leading to a huge, unplanned spike in expenditure.
Spreading the cost over multiple years means the annual levy may be higher than a purely reactive strategy, but spikes in expenditure are lowered and can be prepared for. Planning works in advance also allows time to consider redesign options or plan enhancements – such as adding insulation – that improve the buildingâs efficiency, provide sustainability benefits and ultimately increase the assetâs value.
Setting Body Corporate levies requires strategic LTMP advice
LTMPs fail when they donât address the needs of the individual property and its owners. While the Unit Titles Act requires every unit title property to have an LTMP, and to have a maintenance fund, it doesnât enforce that the maintenance schedule is implemented, or that the maintenance fund needs to align with the LTMP. If a maintenance schedule is deemed too difficult or expensive to deal with, the best of intentions can easily go out the window.
The LTMP must work with the Body Corporateâs objectives, and those may be very different from property to property.
For example, a new build 150-unit property might have very low expenditure in its early years, with significant expenditure spikes after two or three decades as critical elements near end-of-life. On one hand, accumulating the funds over a lengthy period gives plenty of time to prepare, and levies can be kept relatively consistent over that time. However, this might clash with the Body Corporateâs desire for a low levy in the first 10 years to reflect the owners living in a new building. Itâs a hard sell to convince people to pay a high levy for works that arenât happening for 20 or 30 years, when thereâs a good chance they wonât be around to see the benefit.
In that case, different budgeting strategies can be applied to keep levies low whilst the building is new and raise them when the building enters a phase where expenditure is expected. How far in advance the funds for those major works are collected, and how high or low the levy will go, can again be tweaked based on the Body Corporateâs objectives.
For older properties that have seen little to no maintenance and where significant works are imminent, a higher levy up front will be necessary for immediate expenditure, but can be reduced as time goes on to reflect the upgrading of the building with more modern, durable and predictable elements. The skill of the building surveyor is in advising clients what short term works are essential so that other works can be delayed whilst funds are accumulated.
Clearly it pays to have an LTMP prepared by an experienced professional who understands the commercial realities of managing Body Corporates and Unit Title properties. Itâs time to move away from the compliance mindset and start looking strategically at LTMPs as a way to enhance the performance and condition of a property, providing security and surety to the buildingâs owners and occupants, and ultimately adding value to the asset itself.
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