Legal
Reserve Fund
Definition
Money set aside by a management company or freeholder to pay for planned major works on a building — such as roof replacement, external repainting, or lift overhaul. Also known as a sinking fund. A well-funded reserve reduces the risk of large unexpected bills through special levies.
Why it matters
When buying a leasehold flat, always ask to see the current reserve fund balance and any planned major works. A low or empty reserve fund is a red flag — it means large bills are likely coming. RICS guidance suggests reserves equivalent to at least one year's service charge.
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