What is a reserve fund?
A ‘reserve fund’, sometimes called ‘sinking fund’, applies only to leaseholders.
The purpose of the reserve fund is to build up a sum of money in order to cover the cost or expensive costs such as redecorations, structural repairs, lift replacement, etc.
The reason they are built over time is to ensure all occupants contribute to these costs, rather than the ones that happen to be in occupation when the works are carried out, and also to even out the costs over a period of time, avoiding very large one-off bills.
The fund is held in an interest bearing account and is not refundable.