Question 1

Sinking Fund

Accepted Answer

Q: You kindly provided us with some guidance a few years ago whilst we were going through the process of 'collectively enfrachising' to purchase the freehold and grant ourselves new longer leases. We have been self managing the block of eight flats for a few years now and are slowly building up a sinking fund to cover the unforeseen items. As the block is now 11 years old the reserves typically have seen a battering in the last couple of years. One of our newer residents has asked what our target is for an appropriate level of sinking fund, having started with a very modest dowry from the developer. Does the FPRA have a guidance note on this? The development is a three-storey, low rise, high-spec stone-built block with a lift under a mostly slate roof. A: FPRA Committee Member Colin Cohen replies: FPRA newsletter 100 (Spring2012) contained a very relevant checklist. This is available on our website. I am not aware that FPRA has any guides as to rates for sinking fund contributions, as in any case each block is different. Thus, in order to calculate the amount of funds to be held in a sinking fund it may be advisable to have a planned maintenance programme drawn up by a professional surveyor unless one of the residents/lessee has knowledge of doing this. In short, a spread sheet needs to be made putting in every item of common parts that need to be maintained/replacing and preferred time frame. External and internal redecorations may already be stipulated in the individual leases and a guide based on either past cost with room for increases for inflation, or the likely cost. A rough cost should be put down in the various categories and then spread over a number of years (say five or ten years). Question submitted January 2018

Question 2

Sinking Fund

Accepted Answer

Q: You kindly provided us with some guidance a few years ago whilst we were going through the process of 'collectively enfrachising' to purchase the freehold and grant ourselves new longer leases. We have been self managing the block of eight flats for a few years now and are slowly building up a sinking fund to cover the unforeseen items. As the block is now 11 years old the reserves typically have seen a battering in the last couple of years. One of our newer residents has asked what our target is for an appropriate level of sinking fund, having started with a very modest dowry from the developer. Does the FPRA have a guidance note on this? The development is a three-storey, low rise, high-spec stone-built block with a lift under a mostly slate roof. A: FPRA Committee Member Colin Cohen replies: FPRA newsletter 100 (Spring2012) contained a very relevant checklist. This is available on our website. I am not aware that FPRA has any guides as to rates for sinking fund contributions, as in any case each block is different. Thus, in order to calculate the amount of funds to be held in a sinking fund it may be advisable to have a planned maintenance programme drawn up by a professional surveyor unless one of the residents/lessee has knowledge of doing this. In short, a spread sheet needs to be made putting in every item of common parts that need to be maintained/replacing and preferred time frame. External and internal redecorations may already be stipulated in the individual leases and a guide based on either past cost with room for increases for inflation, or the likely cost. A rough cost should be put down in the various categories and then spread over a number of years (say five or ten years). Question submitted January 2018

Sinking Fund

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