1. Sinking Funds The Hafod Approach Richard McQuillan Head of housing Services Hafod Housing Association

2. How do Hafod Manage Sinking Funds? Site surveys Component accounting Annual reviews Leaseholder charges Introducing Sinking Funds Avoiding problems Open & transparent

3. Site Surveys Itemise all major works components Ensure all components included in exercise Site surveys to verify; –Component cost –Age –Condition –Length, size, type etc. Highlight, walls, fencing, paths & roads etc. on site maps Dangers of desktop exercise

4. Component Accounting Individual accounts for each site Each individual component costed Estimated date of works –Lifespan –Condition Divide overall cost of works by number of years Divide by number of residents List components Agree percentage to cover management charge

5. Annual Reviews Annual checks: Check the condition of the component –Bring forward works? –Put back works? Check the estimated costs reflect market values Include annual inflation uplift Check sufficient monies in the sinking fund to achieve future works Calculate whether there are insufficient funds –Agree timescale to ‘catch up’ i.e. 10 years –Agree additional charge per year

6. Leaseholder Charges Sinking fund charge (General Repairs Reserve) costs supplied Breakdown of each component: –Replacement cost –Annual charge –Renewal date Sinking fund deficits Include in overall leasehold service charge

8. Introducing Sinking Funds Highlight obligations within the lease Consultation with leaseholders –Newsletters –Meetings Be open & transparent Explain the charges Aim to avoid future ‘one off’ charges Overcoming sinking fund deficits

9. Recent Press

11. Avoiding Problems Ensure the lease allows the charging for a sinking fund Ensure accurate site survey –Prevent finding new components to add to the charge –Avoid looking inconsistent –Set charges and keep to them Check the estimated costs reflect market values Include annual inflation uplift Decide if works need to be brought forward / can be delayed

12. Open & Transparent Provide break down of sinking fund charges Provide sinking fund accounts (on target / deficits) Remind leaseholders that this approach allows a manageable build up of sinking fund monies Talk through any concerns Be consistent

13. Any Questions?