Reserve funds and sinking funds: what leaseholders can ask

England and Wales · Law checked 24 October 2026 · Not legal advice

Many leases allow the landlord to collect a reserve fund (also called a sinking fund) for future big costs such as roofs, lifts and redecoration.

Points to check

• Does the lease allow it? A reserve can only be collected if the lease permits it.
• Is the contribution reasonable? It should reflect a sensible plan, ideally a planned maintenance schedule.
• How is it held? Service charge money is generally held on trust for the contributing tenants (s.42 LTA 1987, for many leases). Ask for the account details and the balance.
• Is it reported? The section 21 summary must show sums standing to tenants' credit.

The 18-month rule works differently for reserve contributions, so get advice before relying on it. Selling? Contributions usually stay with the building: see selling with a dispute.