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

  • Filter
  • Time
  • Show
Clear All
new posts

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

    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?

    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.


      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.


        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.


          Or was it spent on something unexpected and necessary!

          An explanation should be politely requested in writing


            Originally posted by Neelix View Post
            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.


            Latest Activity


            • Reply to 2-1 transfer - what does Freeholder do?
              by AndrewDod
              On what exact basis is the "fee" - what does lease say? Since you are doing it yourself, if a fee is allowed, would have thought "reasonable" might be about £5 for 10 minutes
              26-05-2022, 21:34 PM
            • 2-1 transfer - what does Freeholder do?
              by Flashback1966
              I am a Freeholder. Have a flat there too. I have received an email from the leaseholder's soclitors acting for Mr A. They are doing a 2-1 transfer from the names of Mr A and Ms B to just Mr.

              The solicitors want to know the requirements on completion.

              Is is just a notice of...
              26-05-2022, 18:46 PM
            • Reply to Section 20
              by Anna1985
              Macromia , yes part of driveway demised to LL and part not demised to anyone.

              According to lease the LL should his part to keep and maintain the said area edged bla in a neat and tidy condition and further to keep and maintain the fences belonging thereto in a good state of repair....
              26-05-2022, 20:46 PM
            • Section 20
              by Anna1985
              So the lease allows for the property to be kept in good condition.
              Thus, the shared hall could be spruced up no problem, but there is an issue with driveway - partially it belongs to the freeholder, partially to the ground floor leaseholder - it is made out of the old paving stones, it looks...
              22-05-2022, 21:03 PM
            • Reply to 2-1 transfer - what does Freeholder do?
              by sgclacy
              In addition to the notices sometime the lease may require a deed of covenant and therefore you may need to prepare a deed of Covenant

              If there are any arrears these must be settled on completion...
              26-05-2022, 20:27 PM
            • Reply to 2-1 transfer - what does Freeholder do?
              by Lawcruncher
              What does the lease say?

              You do not need confirmation from Mrs B.
              26-05-2022, 20:27 PM
            • Share of feehold/shared service charges?
              by Stu1020
              Hi there,

              I'm new to the forum and looking for advice on a sticky freehold situation.

              I own a two-bed flat in a converted building with two one-beds. The lease states that a fair proportion is payable towards the service charge. However, there has been a running agreement of...
              20-05-2022, 11:39 AM
            • Reply to Share of feehold/shared service charges?
              by Flashback1966
              The other flats are demanding I pay 38% of costs to extend leases when the freehold itself, a very comparable legal procedure, was calculated on an equal third share.

              Confused. Did you extend the lease or buy the Frehold?

              In my opinion, if the Freehold was purchased, it should...
              26-05-2022, 17:49 PM
            • Reply to S20 - Quotes not valid for long enough for 30 day consult
              by Gordon999
              If the review is just between 2 flats, calling a meeting with upstairs leaseholder , to review quotations and decide which one to accept will be quicker than waiting for 30 days. With inflation around 10% p.a , the parties at the meeting could choose to accept a quotation at 2.5% higher than a...
              26-05-2022, 14:20 PM
            • Old managing agents accounts
              by jazzythumper
              Since obtaining the RTM and changing the managing agent, we have never been given full accounts / receipts for the previous year(s). We believe that as the old freeholder and leaser holder of one of the flats were represented by the same solicitor that prior to the sale of the freehold, we were subsidising...
              20-05-2022, 11:21 AM