What is the reserve fund and what can it be used for in leasehold property?
A reserve fund is a dedicated pot of cash that is used to cover the cost of repairs for a building owned by a number of leaseholders. Reserve funds are built towards future cyclical expenditure (such as the replacement of the lift of the re-covering of a roof and/or general block redecoration). Collecting a reserve fund helps spread costs as the due date approaches. Only if the lease allows should a reserve fund be used to fund the cost of routine services. Legislation assures that the money held in the reserve fund is held on trust with interest accruing to the lessees collectively. When a lessee sells their property service charges are not refunded to the individual selling but held in the service charge pot as a benefit to the incoming purchaser.
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What is the reserve fund and what can it be used for in leasehold property?
A reserve fund is a dedicated pot of cash that is used to cover the cost of repairs for a building owned by a number of leaseholders. Reserve funds are built towards future cyclical expenditure (such as the replacement of the lift of the re-covering of a roof and/or general block redecoration). Collecting a reserve fund helps spread costs as the due date approaches. Only if the lease allows should a reserve fund be used to fund the cost of routine services. Legislation assures that the money held in the reserve fund is held on trust with interest accruing to the lessees collectively. When a lessee sells their property service charges are not refunded to the individual selling but held in the service charge pot as a benefit to the incoming purchaser.
Valuation Services provided by The Ringley Group
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Meet our Expert Property Commentators
Mary-Anne Bowring FTPI FRICS FARLA FCABE Founder/Head of Asset Management
Strategic partnerships, holistic delivery/ opportunities, growth, value engineering, thought leadership
Ian Barber MD BTR Mobilisation & Leasing
Runs HQ & site lease-up teams. Drives rent pricing, mobilisation, marketing, happy residents!
Jon Curtis MRICS Head of Building Engineering
Chartered Building Surveyor. Lectures on EWS1 & building safety. Runs CapEx programmes.
Kate Robinson MTPI MD Blocks/FM Management (London Region)
Master plan setup, ops and staffing and resident engagement. ISO45001 champion.
Lee Harle Partner Ringley Law
Plot conveyancing. Debt litigation. Group Company Secretary.
Anthony Kingdon MIRPM AssocRICS MD Blocks/FM Management (North Region)
Stakeholder engagement. Mixed tenure specialist. Budget management. Plant audit, PPM compliance.
Chris Georgalis MRICS Head of Commercial Valuation
Chartered Valuer. Rental valuations: retail, leisure. IRR modelling and valuations for secured lending. Compulsory purchase & rent reviews
Nichola Pughe MRICS Head of Residential Valuation
Chartered Valuer. Rental development & mixed use valuations, IRR modelling. Leasehold enfranchisement specialist
Natalie Birmingham Helpdesk Support Manager
Trainer & Helpdesk Manager: people, systems,contractors. ISO45001 supply chain accreditation.
Steve Norman Planning Director
Land due diligence (opportunities & constraints) Has contributed to a number of award winning schemes.
