Charges
... Sinking Fund
The biggest single expenditure and demand on the reserve fund is the external redecoration of the building, an exercise that used to take place roughly every 7-8 years depending on the current state and which usually drained the fund to near exhaustion. The job in 2009, for example, cost around £30,000 and was covered entirely by the reserve fund. It did, though, take at least five years to recover that cost. In more recent years, this particular exercise has been changed to be a rolling programme of redecoration and external appearance maintenance to spread the cost load over the 7-8 year cycle.
In most cases there is usually a clear high priority job that needs to be done next but where this is not the case then the owners are consulted to determine the preferred priority sequence of requested improvements. It must be understood, however, that (1) if there is no available money in the fund then no major work can be done without additional cost to all owners, and (2) it is prudent to retain (or ‘reserve’) a reasonable level of funds for emergency or urgent repairs.
The reserve fund contribution is equal for all leases and, like the Service Charges, is collected twice a year in April and October.
Insurance
Property insurance comes in two parts - buildings and contents. You/your tenant must have full contents insurance, the choice of which is a matter for you but you must ensure that it covers the key requirements, whether you are the occupier or not.
Also, as owner/leaseholder, you are required to contribute to the building insurance. The choice of the buildings insurance is organised between the managing agent, the Directors and an external insurance broker to find the most cost-effective supplier. The cost and supplier of the policy are reviewed annually, with the final cost being re-charged back to the owners.
The insurance cost is proportional to the floor surface area covered by your lease and is collected annually in April.