What is a Building Investment Fund (Sinking Fund)?
A Building Investment Fund (Sinking Fund) is a reserve created to build up sums which can be used to pay for large items of infrequent expenditure such as the refurbishment of a roof and for major items which arise regularly such as redecoration of the common area interiors. The sums required can be significant over a 20 to 30 year life cycle. The fund should be initiated from the very first year and then adjusted as necessary annually and collected to avoid, as the work arises, the costs having to be funded through a special levy or a one off lump sum. Funds and expenditure headings are specific to the development and will differ accordingly. However in simple terms infrequent but essential refurbishment or replacement headings are • Lifts (upgrades and/or replacements) • Mechanical and electrical plant – lighting systems, pumps, fire alarm and safety systems, intercoms, security plant i.e. CCTV cameras • Gates – motors and parts • Roofs – major repairs to, or replacement of materials
