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Sinking Fund PDF Print E-mail

A sinking fund is designed to be utilised almost like a savings account, to save for the future, for any major works or repairs that are required. 

During the first five years of the initial build of any flats, there are very few major problems associated with the maintenance and it is at this time your Managing Agent should be collecting funds to save for future works.

Indeed a lot of people purchasing flats are often concerned when they find out there is no sinking fund and if any major works are then required, they may well have to “dig deep” into their pockets, to pay for these works, as no provision has been made in previous years within the budget.

Maintaining communal areas within blocks of flats during the first few years is relatively economical, however as fair wear and tear and age starts to take its toll, items become increasingly more costly to repair and will often need to be replaced.

The sinking fund can also be utilised to save for decoration of external or internal areas, roofs or any large unforeseen repairs and can be listed within the budget, as those items, year on year.

The ability of a reserve / sinking fund is that this money is already in the account to enable these works to go ahead, rather than invoicing for extra monies to the owners when works are due and go through the very costly expense of utilising Section 20 Notices, to make demands on the Lessees already tight finances.