What is your sinking fund and <BR> what does it cover?

What is your sinking fund and
what does it cover?

Upon reading any budgets which are published within your lease you will have seen part of the budget which is outlined 'Reserve Fund' or 'Sinking Fund.'

Do you as a resident or tenant know exactly
what you're paying for?

The sinking fund is a set amount of money that is kept aside for large projects with the long-term well-being of the development in mind. Projects which can be classified as 'major works' include roof repairs, window replacements and general projects to maintain the longevity of the development. We understand that paying into a sinking fund allows for the future safety and well-being of a development to be met without compromise. Without the sinking fund, residents would have to pay large sums of money in one go if emergency work needed to be carried out; something that not everyone would be able to do.

Generally, our most common use of sinking funds will be for the repair and redecoration of the internal and external common parts of a development. This may include painting of communal hallways and in some cases replacing the carpets. On the external front, this may cover cleansing and painting of external cills, painting, and renewing render if applicable or in the case of one of our schemes repainting of the balcony metalwork.

A further item which would be used from the sinking fund would be renewing and in some cases on a large-scale basis; repairing M&E equipment, lifts, lighting and pumps all need attending to at some point and we would consider using the sinking funds for such items if the required work is large scale, planned or costly.

Finally, on estate-based schemes the role of the sinking fund will be much more specific; due to estate-based schemes not having internals to attend to or M&E equipment. On an estate, an example of where the reserves may be used would be carrying out large scale tree work which would fall outside of the day to day budget. This is often planned using tools such as an arboriculture survey. A further estate relevant example would be car park area surfaces that are not demised or council adopted.

Renewals Renewals


Are where we save for larger projects for the buildings common areas such as a new roof, new lighting systems, new windows, doors, rainwater goods and in some instances items like garage gates and replacing bin stores. Think of anything that gets old that needs to be renewed or replaced.

Cyclical Cyclical


Are for the cycle items, so things that are done on a rotation basis, typically this is redecorations (usually 3 to 5 years) new carpets, (10+ years depending on condition) external works like render cleaning of buildings and jet washing of pathways.


Where are the sinking funds stored?

All funds are held in trust in separate interest-bearing accounts in line with stringent guidelines set out by RICS and ARMA. All sinking funds are held separately to day to day funds.

What percentage of my service charge goes towards sinking funds?

The sinking fund percentage will vary from site to site. Contributing factors to the sinking fund will be aspects including: age of the building, number of residents and time since last major works projects.

What are Mainstay’s example of sinking funds being used?  

A recent example of the sinking funds being used is at Altamar in Swansea. Over the last two years we have transformed the development with new windows & doors, freshly painted balconies, replacement rainwater goods, bin store areas and new external LED lighting.  This project is nearing completion and it’s great to see the 25-year-old development getting a more modern-day feel.

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