Understanding sinking funds and major works
Some examples of common obligations are set out below. These spell out what you are responsible for.
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What is a sinking fund?
A sinking fund is money set aside over time to help pay for major repairs and improvements to your building.
This could include things like:
- replacing roofs
- replacing windows
- fire safety improvements
- other large-scale maintenance works needed to keep the building safe and in good condition
Building up a sinking fund helps spread the cost of these works over a longer period, rather than asking leaseholders to make a large one-off payment when work is needed.
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Your lease and how your contributions are set
Your lease is a legal agreement that explains the charges you're responsible for paying as a leaseholder.
Depending on the terms of your lease, this may include contributions towards:
- day-to-day service charges
- a sinking fund for future major works
The amount you contribute is calculated in line with your lease and must be applied consistently for all leaseholders.
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Why contributions can change
Buildings need different types of maintenance at different stages of their life.
Some years, the building may require very little major work, while other years may involve larger projects, such as replacing key building components that have reached the end of their lifespan.
Because of this, sinking fund contributions may:
- stay the same when no significant works are expected
- increase when major works are planned in the future
These changes help make sure enough money is available when important work is needed.
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Why the figures are only estimates
The costs we share are based on our long-term Asset Management Plan. This uses building surveys, expected component lifecycles and maintenance forecasts to help us plan ahead.
At this stage, the figures are estimates and may change.
Final costs are only confirmed after:
- detailed surveys have been completed
- contractors have been appointed through a procurement process
- the Section 20 consultation process has taken place
Before any major works are carried out, we'll consult with leaseholders through the formal Section 20 process. This is a legal requirement that gives leaseholders the opportunity to review the proposed works, understand the estimated costs and share their feedback before decisions are finalised. We'll provide detailed information at each stage to help you understand what's planned and why.
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Why plans sometimes change
Although we plan maintenance work well in advance, there are times when priorities need to change.
This can happen because of:
- new legislation or regulatory requirements
- changes to fire safety standards
- urgent health and safety issues identified through inspections
When this happens, we may need to bring work forward or change our plans. This can affect future sinking fund contributions if additional funding is needed for essential works.
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Why costs may be higher in some years
Our aim is to keep buildings safe, compliant and well maintained.
If significant works are expected within a particular period, contributions may increase to help prepare for those costs.
Before any major works are carried out, we'll consult with leaseholders through the formal Section 20 process.
This will include:
- details of the proposed works
- estimated costs
- an opportunity to review the information and share your feedback
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Why leaseholders may pay different amounts over time
Most leaseholders own their home for only part of a building's lifespan.
This means some people may contribute more towards major works during their period of ownership, while others may contribute less, depending on when those works are needed.
Over the life of the building, costs are shared in line with the responsibilities set out in each lease, helping ensure a fair contribution towards maintaining the building for everyone.