Sinking fund.... why so huge?

bodmil

I hope this is in the right place and someone can help. I bought my first flat in July and have just had the bill for a 5yr sinking fund of £5000. Given they are billing me now they're asking for £86 a month from now on. This has given me a huge shock, I was perhaps naively under the impression that it was a voluntary fund and I could pay up when work needed to be done. But the amount just seems extortionate, it's almost the same as my council tax and I'm sure I get more bang for my buck there!
It's only a little 2 bed flat, £1000 a year on repairs doesn't seem fair! Am I in cloud coocooland or is this really standard?

liamfahy

I think firstly you need to read the paperwork when you bought the flat to understand your legal obligation regarding this sinking fund.

bodmil

If it's of any consequence the service charge is quite low at £400 ish per year and it's a block of 6 flats managed by a social housing association.

bodmil

Right - I have a bit more information to follow up on this if anyone is able to help?

I've been supplied with a programme of works with no dates of planned work or dates that the work was last completed. There is damage to the building and I have had damp in my flat, yet no cost has been allocated to work on the gutters.

Basically they have slapped a nice round £5000 on the bill then shimmied the amount around to a few standard things like external painting (it's a stone building) and general repairs with no real consideration to actual schedule of works or accurate estimates.

I'm researching all I can now on leaseholder rights and what information I am supposed to be supplied as I feel very much like this falls below that standard!

Any leaseholders with experience of this? I have spoken to the leasehold manager who says no one has ever raised a query about their programmes of work before!

tim123456789

In simple terms, your rights are:

1) if you have to contribute to a sinking fund aganst unspecified future works then this will be detailed in your lease. If it isn't so detailed then they can't collect money in this way.

2) If they want to collect money for specific extraordinary works then (assuming that it's above 250 pounds per flat) they have to go through the correct section 20 notification and consultation process and if they don't, you don't have to pay (not just in advance - at all.

Just because they've "got away" with doing it wrong in the past is no reason at all why you should pay against incorrect demnds in the future, and the sooner they learn that, the better IMHO

HTH

japmis

Bodmil, are they asking all 6 flats to put £5k toward a sinking fund???!!!

sgun

Bodmil, where are you in the country?

blckbrd

tim123456789 wrote: »

In simple terms, your rights are:

1) if you have to contribute to a sinking fund aganst unspecified future works then this will be detailed in your lease. If it isn't so detailed then they can't collect money in this way.

2) If they want to collect money for specific extraordinary works then (assuming that it's above 250 pounds per flat) they have to go through the correct section 20 notification and consultation process and if they don't, you don't have to pay (not just in advance - at all.

Just because they've "got away" with doing it wrong in the past is no reason at all why you should pay against incorrect demnds in the future, and the sooner they learn that, the better IMHO

HTH

i doubt the HA isn't clear about the lease provisions for a sinking fund. Unless the property was originally sold under RTB/RTA at the inception of the legislation - this would be sewn up in the lease.

Contractors bidding on publiuc sector works know their market and their competition. While I have never seen any evidence of bid-rigging, the tenders are absolutely over-inflated and the wormanship substandard.

bodmil

japmis wrote: »

Bodmil, are they asking all 6 flats to put £5k toward a sinking fund???!!!

Yep, £1000 per year per flat.

Thanks very much Tim, it's in the leaseholder pack but no amounts specified, to be honest I had forgotten about it as I'm paying the service charge and have refurbed my flat.

propertyman

tim123456789 wrote: »

2) If they want to collect money for specific extraordinary works then (assuming that it's above 250 pounds per flat) they have to go through the correct section 20 notification and consultation process and if they don't, you don't have to pay (not just in advance - at all.

I am afraid that is wrong

1: it is only where the money is to be spent that consultation is required. if it says new carpets in year 3 then consultation is done then.


2: Its not £250 per flat, its if any one flat would pay £250.

If a lease allows for a sinking fund , then all that is required is that the provision is reasonable ( under section 19 LTA1985) ie that the works proposed are reasonable and that the provision is a suitable amount.

bodmil

Thanks propertyman - my concern is that they have pulled the estimates out of thin air. Do I have any rights to see quotes for the work to be done?