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Reasonable repairs fund value for block of flats?

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Author Topic: Reasonable repairs fund value for block of flats?  (Read 284 times)
Newbie
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I like property

« on: April 01, 2021, 09:47:20 AM »

Hello, I'm a leaseholder in a block of 15 flats. The service charges we've been paying have been exceeding the freeholder's expenses by around 4,000/yr and this has been put into a major repairs fund, which is now worth around 30,000. Whilst I favour having a moderate reserve fund to ensure that urgent repairs can be carried out, I'm wondering why it needs to keep growing at this point, tying up leaseholders' funds. I've asked the freeholder several times if he has a plan for how large the reserve fund will be allowed to grow before the service charge is reduced or whether he foresees particular large repairs in future, and he just gives vague responses about there being a possibility of an expensive repair one day and doesn't seem to want to consider reducing the charge.

So I was wondering what are your opinions about how large a major repairs reserve could reasonably be for a block of this size? For some context, the block is only 17 years old I think, 3 stories high and the roof area covers about 5 flats (which I thought might be relevant since replacing the roof one day will be a major expense). Actual maintenance costs have been ~3-4,000/yr. The lease doesn't seem to say anything about paying into a repairs/reserve/sinking fund, so I think I may be able to legally challenge the charge if it came to it, but would want to feel sure that the freeholder is actually being unreasonable.
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« Reply #1 on: April 01, 2021, 10:18:34 AM »

Are you saying you want to instigate a legal challenge over 266 per year (4,000 / 15)? I mean... sure... it's growing... and growing... but one day may be needed... and it's not as if the Freeholder will be earning loads of interest on the sums you talk about. If things are that tight for you right now then maybe you need to reduce your Sky package, mobile phone plan, cancel Netflix... whatever it takes before looking 'outside'. A healthy (even bloated!) Sinking Fund is a great idea... too many shared buildings overlook it and then Leaseholders cry when, one day, there's a really large bill.

I understand that raiding the Sinking Fund is tempting... but 30,000 / 15 is only 2,000... and didn't we all carp when Gordon Brown raided the Pensions?

I think you should find another hobby rather than being a trouble-causer (said with the greatest of respect) as I, for one, don't think this errs on unreasonable... maybe "overly prudent" might describe it?

If the Sinking Fund had reached 130,000... different story... just by feeling, not by experience... the raid would be a worthwhile raid then, even if there were casualties.
Newbie
Posts: 3

I like property

« Reply #2 on: April 01, 2021, 09:00:16 PM »

Thanks for your reply. I'm just wondering what is reasonable - can you say what is the point between 30k and 130k where it would become unreasonable to you? (And I don't think my own financial circumstances or what I choose to spend money on have much to do with it.)
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« Reply #3 on: April 01, 2021, 10:06:26 PM »

You need to focus your time and energy better.
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