Sinking Fund - Figures Don't Tally Up on Annual Statement

[Misono]

Hoping for some guidance on this one before I fire off to the freeholder, who is a Housing Association.

I've had the annual statement through, and under the sinking fund it's showing as income for the year of exactly £15,000. The block consists of 34 flats, with a mixture of 100% owners such as myself, shared owners and HA renters.

We were required by the lease to pay an equal share of the SC's, so should be 1/34th. My monthly sinking fund contribution was £50 in the period, so working on the basis of all things being equal, I'd expect the annual income to be 34 x £50 * 12 = £20,400. The £15k income divided by £50 suggests only 25 flats have contributed towards this.

This seems a bit unreasonable to me, as in my opinion the HA, assuming the missing 9 flats are all the rented ones (can't find out numbers), should be making some kind of contribution to the sinking fund. I can't see anything in my own lease regarding this, and can't help but feel I must surely be missing something somewhere (£450 a month before we get smart with the replies!).

Anyone come across anything like this previously?

[eagle2]

You are entitled to ask why the sinking fund does not include £20,400 when that sum appears to have been charged to leaseholders. If the lease states that all leaseholders contribute an equal sum, you are correct that should apply to all 34 flats.

It is possible that they have decided to reduce the total annual charge to £15,000 but in that case, you would be entitled to receive a credit of your share of £5,400 (£20,400 less £15,000).

It is also possible but it would be unusual that they have only added the amounts which have been collected from leaseholders and the remaining sum of £5,400 will be added when received. It would be more normal to add the full amount and include the £5,400 under amounts owing from leaseholders.

[AndrewDod]

Ask the questions.

I am afraid that stealing via sinking funds is a common form of theft (by freeholders and fellow lessees). Looks likely the FH/Housing association is not providing their share for their owned units. Ask for the full accountant certified accounts, and the bank statements. If they refuse to explain, progress the case to FTT.

[eagle2]

I agree with AndrewDod that theft of sinking fund monies is widespread. In your case, you state that there is a separate charge and the lease should require monies to be kept in a separate bank client account. I also agree that you should ask to inspect the bank statements and do not be deterred by any excuses.

You should receive an explanation of how the monthly contribution of £50 has been calculated. It should be reasonable and it should only be for the specific purposes set out in the lease.

I suggest that you watch like a hawk all movements on the sinking fund and challenge any unexplained deductions, which is precisely what the £5,400 is.

[Neelix]

Or was it spent on something unexpected and necessary!

An explanation should be politely requested in writing

[eagle2]

Or was it spent on something unexpected and necessary!

An explanation should be politely requested in writing

If there is expenditure, they should report income of £20,400 and expenditure of £5,400. they should not disclose only the net movement, They should also provide a brief description of the expenditure.