What does 'Sink Fund' mean when buying a property?

Find out what Sink Fund means when you are buying a property. 'What does Sink Fund mean?' plus over 150 other property related terms and jargon in plain English

Sink Fund

Most leasehold and share of freehold properties have a sink fund. This is an amount, kept in a bank account, to pay for major expenses such as a new roof or new windows.

It is not meant to be used for day to day purchases and maintenance. Note that just because there is a sink fund, this does not mean it contains adequate funds and it may have to be topped up by the leaseholders should urgent and major repairs need to be carried out on the building.

Checking if there is a sink fund and, if there is, how much cash is in there is a standard part of the buying process alongside carrying out managing agent enquiries to see what works have recently been carried out and what works are planned.

This all gives you advanced warning of what expenses may be coming up should you buy the property and how expensive these may be to you.

To learn all the steps involved in purchasing a property and how to handle them the smart way pick up a copy of my ebook How to Really Buy a Property.

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"... methods for financing a Share of Freehold property are: Pay a specific amount every year for day to day maintenance and bills. Any payments purposefully over this are called the sink fund and are savings for the unexpected. Pay for things as they come along. Hire a managing agent to do..."

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