What is a sinking fund?

When you buy a property that is termed leasehold, part of the service charge may be paid into a sinking fund.  The sinking fund builds up over the years to cover future projects that may be needed to repair or improve the building.  The freeholder or the property management company will be responsible for the service charge management and will notify leaseholders if part of the service charge will be paid into a sinking fund.

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