Reserve and sinking funds
A reserve fund starts with the lease, not a percentage.
Check the power to collect, the long-term works plan and the money already held. A neat annual figure is not evidence that the fund is right for the building.
View the supporting illustration
Start here
Connect the fund to the building plan.
Does the lease allow it?
Identify the clause permitting advance contributions, the purposes for which the money may be used and the method for calculating each leaseholder's share.
What work is being funded?
Use surveys, condition information, lifecycle assumptions and an indicative programme. State what is known and what is still an estimate.
What is already held?
Reconcile the opening balance, contributions, interest, expenditure and closing balance. Keep the fund purpose and any sub-funds visible.
Work through it
Turn a balance into a defensible funding story.
- 01
Lease authority
Quote the clause that permits collection and use. Not every lease allows a reserve or In plain EnglishMoney collected for future building expenditure where the governing documents allow it.Open the plain-English glossary.
- 02
Asset plan
List the relevant building elements, expected intervention, timing, current cost basis and uncertainty. Update the assumptions as evidence improves.
- 03
Fund record
Show what has been collected, how the money is identified, what has been spent and how the balance relates to the plan.
- 04
Works process
A reserve balance does not remove a separate In plain EnglishThe common name for consultation rules that can apply to certain building works and long-term agreements.Open the legislation consultation duty where the statutory requirements are met.
Take the next step in LEASE-iQ®
Can this cost be recovered through my lease?
Use this for a charge, budget increase, reserve-fund contribution or disputed service.
Copy questions for this issue
Keep checking: The lease can show the charging route. It cannot prove the amount, standard of work or demand paperwork on its own.
Open the sources
Link the fund to the lease and the works plan.
This guide explains the current questions for residential service-charge reserve funds in England. It does not set a contribution level or decide whether a particular demand or expenditure is reasonable.
Service-charge contributions held on statutory trust
↗LegislationLandlord and Tenant Act 1985, section 19Reasonably incurred costs and reasonable advance contributions
↗Independent guidanceLeasehold Advisory ServiceCurrent independent guide to reserve and sinking funds
↗Independent guidanceLeasehold Advisory ServiceCurrent independent Section 20 guide for qualifying works
↗Prepared by Adam Street, founder of building trust. Sources and current-law status checked 18 August 2026. Legislation links are controlling sources. The lease determines whether the fund may be collected and how it may be used.
