Reserve funds: why your building needs one
Saving steadily beats a sudden five-figure bill.
Reviewed by Mark Cunningham AssocRICS MTPI MIFSM, Leasehold Director. Last reviewed 3 October 2026.
A reserve fund (sometimes called a sinking fund) spreads the cost of big, predictable items, such as roofs, lifts and redecoration, over many years.
Can your building have one?
Only if the lease allows it. Money held is on trust for the leaseholders under section 42 of the Landlord and Tenant Act 1987, kept separate from the agent's own funds.
How much?
A planned maintenance schedule sets the target: each component's cost divided by its expected life. The RICS Service Charge Residential Management Code encourages long-term planning of this kind.
What is coming
Government has consulted on making reserve funds mandatory. No decision has been made yet.
Sources
Landlord and Tenant Act 1987RICS Service Charge Residential Management Code, 4th editionThe Property Institute: update on the Leasehold and Freehold Reform Act 2024How we can help
Full block managementSection 20 major worksAJ LiteWe provide block management across Southport, Churchtown and Kew, Birkdale and Ainsdale, Formby, Ormskirk and Aughton, Crosby and Maghull, Bootle and Litherland, Liverpool, Hesketh Bank and Tarleton and Preston, Penwortham and Longton. For the law in brief, see Know the law.General information about the law in England, not advice on a particular building.