Where provided for in leases, Erimus Housing will establish sinking funds to provide for future major repairs to avoid large one-off service charge demands. We also aim to establish sinking funds for other buildings on a voluntary basis.
Calculation of sinking fund contributions will be based on a professional assessment of the life expectancy of the building components and will be included in the service charge.
Setting up a sinking fund helps to ensure that all occupants, irrespective of when they actually live in the scheme, share the financial cost, as it would be unfair to expect future occupants to pay for major works. The sinking fund helps maintain the value of your assets and avoids or offsets the need to pay large one-off sums when major works are required. By law we have to consult with you before ordering any major works unless it is an emergency.
The actual contribution into the sinking fund is reviewed each year based upon when the various building components which are likely to require replacement and what the cost will be. This is based on a professional assessment of the life expectancy of the building components, a component may exceed the prediction and, conversely, it may require replacement earlier than expected. The level of contributions is reviewed periodically and the amount in each scheme’s sinking fund is shown in the audited accounts.
Monies held in the sinking fund are held in ‘trust’ for each scheme in an interest bearing account. The interest received is added to the sinking fund and is shown in the audited accounts. As the monies are held in trust, we are unable to use these amounts for our own purposes and, in the very unlikely event of Erimus Housing going out of business, creditors would not have a claim against them. The sinking fund on one scheme cannot be used to fund work on another.
Typical major repairs and replacements for which the sinking fund would be used are (this is not intended to be an exhaustive list):
Expenditure on minor repairs to any of the above would normally be met out of the service charge account.
Contact us by calling our contact centre on 08000 461600 or by emailing firstname.lastname@example.org