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Sinking Funds

Some of our developments have a 'sinking fund' in place for major repairs, renewals and replacements, in addition to the cyclical repairs fund. We manage monies on behalf of residents at the development where the lease requires us to set up a sinking fund, into which residents must contribute. 

A sinking fund is necessary to ensure that the cost of major repairs and replacements is paid equally by all generations of residents. It would clearly be unfair to expect future generations to pay for these big expenses.

A sinking fund will be used to help maintain the value of your asset and potential buyers' solicitors will enquire with regard to the adequacy of the sinking fund.  It is therefore in everyone's interest to ensure that enough money is set aside. 

The money in the sinking fund is held in 'trust' on the development's behalf in an interest-bearing bank account.  Riverside do not receive the benefit of the sinking fund, and interest is added to the fund. Depending on your lease and property, the sinking fund will be used for major repairs or replacing such things as:   

External doors, windows, roofs, guttering, walls

External drains and plumbing systems

Footpaths, parking areas, fencing, signboards

Communal electrical systems, TV aerials and lighting

Door entry phone systems

Communal carpets

The amount you pay into the sinking will be dictated by the terms of your lease agreement and your solicitor should have advised you of your liability to pay when you purchased your property.  You will make contributions to the sinking fund from the sales proceeds when you sell the property.  Typically you will pay a percentage of the open market valuation for each year of occupancy, apportioned on a monthly basis as necessary.  This figure will be irrespective of the amount of equity you own which means that all residents contribute in the same way. 

If you 'gift' the property to somebody else (i.e. transfer ownership to another person without any money changing hands) you will still usually be liable to pay a contribution to the sinking fund.  This will be based on the open market value at the time.

We're a not for profit organisation

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Riverside Home Ownership

We're the specialist leasehold and affordable home ownership division of The Riverside Group Limited, one of the UK's largest housing associations. As well as building, selling and letting a wide range of property types, Riverside Home Ownership provides services to, and manages the leasehold of over 4,500 homes across the UK.