What is a reserve / sinking fund?

Most of High Peak Borough Council's leases provide for the council, as landlord, to collect sums in advance to create a 'reserve' or 'sinking' fund to ensure that sufficient money is available for future major works, such as external decorating, roof replacement or lift replacement. The lease will set out the arrangements for this. Any contribution required will form part of the annual service charge.

Contributions to the reserve fund are not repayable to the leaseholder when the flat is sold. If there is insufficient money in the reserve fund to deal with major works the costs will be shared between owners in the proportions set out in the individual leases. If the proportions are not set out in the lease the costs will be divided equally between the number of units in the block.

However, it should be noted at the current time that High Peak Borough Council do not operate reserve/sinking funds.