Understanding sinking funds and reserve funds
A sinking fund or reserve fund is a savings pot that helps plan for larger repairs and improvements. Instead of asking residents to pay a large one-off bill when major works are needed, smaller contributions are collected over time through the service charge.
Whether your lease calls this a sinking fund or a reserve fund, they work in similar ways: helping you save up over time for any costly improvements.
Why do buildings collect sinking fund or reserve fund contributions?
Buildings will sometimes need major repairs and improvements to stay safe and well maintained. These works can be expensive though.
Collecting contributions over time allows the cost to be spread across several years, rather than asking you to pay a large amount in one go when we need to do the work.
What kinds of work does the fund pay for?
Funds are normally used for major repairs or regular maintenance to shared parts of the building. That might include work such as:
- roof repairs or replacement
- external painting and decoration
- lift refurbishments or replacements
- communal window replacement
- fire safety upgrades
- major repairs to shared areas
The exact types of work covered depend on the terms of your lease.
How are contributions calculated?
Contributions are usually based on long-term maintenance planning for the building. These plans have our estimate (or best guess) for when major works are likely to be needed and how much they may cost.
This estimated cost is then spread across several years so you can contribute gradually through your service charge.
How much you contribute will depend on the terms of your lease and how costs are shared across the building.
Do all buildings have a sinking fund or reserve fund?
No. Whether a fund exists depends on the terms of the lease for the building.
Some leases ask for contributions to be collected regularly, while others don’t allow them at all. It’s always best to check your lease to understand what arrangements apply to your property.
How do I know how much money is in the fund?
You’ll get an annual statement showing the balance of the fund and how it’s changed during the year.
This typically includes:
- the balance carried forward from the previous year
- contributions collected during the year
- any interest earned
- money spent on relevant works
- the closing balance
This helps show you exactly how we’re using your fund.
Can the money be used for anything else?
No. Sinking and reserve funds are kept completely separate from any other money.
That means it can only be used for the specific things set out in your lease – usually just major repairs or regular maintenance in shared areas.
What happens if there isn’t enough money in the fund when major repairs are needed?
If the fund doesn’t have enough money to cover the planned works, extra contributions might need to be included in future service charges.
If we do need the extra funding, we’ll let you know in advance.
Do I own my contribution to the fund?
No. Once you’ve paid your contributions into the sinking or reserve fund, they’re part of a collective fund that’s held for the building or estate as a whole.
That means the money isn’t held individually for each resident – it’s all mixed together in a single pot.
What happens to my contribution if I sell my property?
If you sell your home, your contributions remain in the sinking or reserve fund and stay with the building.
They aren’t refunded to you because the fund exists to support future repairs for the property.
However, the balance of the fund can be an important factor during the sale process. Buyers and their solicitors often review the level of the fund when considering the long-term maintenance of the building.
Need to get in touch?
You can contact us by phone, email or the My Peabody portal. Here are the details that’ll really help us sort out the problem:
- Your name and property address
- Specific location of the concern (e.g., "front lawn area," "hedge on north boundary")
- Clear description of the problem
- Photos if possible (especially helpful for overgrown areas or damage)
- Any safety concerns
Phone
If there’s an urgent issue (such as dangerous trees, blocked drainage, or safety hazards) give us a call:
Our lines are open Monday to Friday, 9am - 5pm. For out-of-hours emergencies, press option 1.
For anything that’s not urgent (like general questions or feedback about this service) you can email us:
We’ll try to get back to you within 2 working days.
Online
You can also report issues, track progress, and view scheduled works through your online account:
We’ll send you an automatic update when any work is scheduled or completed.