Provisions fund

Some aspects of the upkeep are paid for with tenants’ rent, instead of service charges.

If you’re a homeowner, you may see two provisions funds. One that’s shared with tenants, and one that’s homeowner only. Anything we use the provisions-homeowner fund for, is used in combination with rent collect from tenants. Homeowners are not paying for the whole bill.  Other costs are covered by the shared provisions fund.

It all depends on what work needs doing, and the contractual agreement among our suppliers, and your tenancy or lease agreements.

We’ve taken a look at all the major works that we’re planning on your building and/or estate over the next 30 years and how much it will cost, and compared this to the contributions you’re making (some customers will start to paying into a provisions fund for the first time in the 2025/26 financial year, which starts on 1 April 2025).

Taking the example of replacing a lift in a shared building:

• We know a new lift typically lasts about 25 years before it needs to be replaced
• We’ll estimate the cost of replacing a new lift in 25 years’ time (accounting for inflation)
• We divide the estimated cost by the number of households in a building, and then divide that by 25
• This gives us how much each household needs to pay each year, to cover the cost of replacing the lift when the time comes.

If contributions don’t cover the cost of the planned works, we’ll spread the costs over an even longer period of time.

We calculate the cost of general maintenance, like decorating communal areas and fixing things on the outside of the building, and add that to everyone’s contribution.

Provisions/sinking funds are built up over time, in order to pay for large things in the future that could be years or decades away. We calculate how much you need to pay each year to cover these costs. So, if no work is required one year, you’ll still need to pay to build up that fund.

We do yearly surveys and analysis to keep track of our funds and make sure there’s enough paid in, without overpaying either.

Yes, we’re legally obliged to issue a Section 20 (S20) notice to let you know about certain proposed major works or services planned at your building or estate. S20s are also your chance to give us your opinion on these plans.

The S20 notice will explain what work is planned, why it’s being carried out and the anticipated costs. You then send us your ‘observations’ in writing, and we’ll consider all the feedback.

There are different types of Section 20 notices, depending on cost, and how the contracts are set up. E.g. framework contracts are slightly different, but the purpose of the Section 20 notice is the same.

You will find further information about our consultation processes by visiting our dedicated consultation page.

We try to avoid this scenario where possible, however unexpected works can happen.

You’ll be consulted about the work, and when it's completed, you’ll receive a bill (known as a final account) which shows the amounts deducted from the provisions (if any) and the amount you’ll have to pay. We’re always happy to make arrangements to help you pay, if you can’t afford a large bill immediately.

Leaseholder provision funds, by law, are held in separately from any Hyde bank account. However, we still manage the amounts paid into it, and how it’s spent. Tenants’ funds are held centrally. In both cases, interest is gathered over time and added to the fund.

No, tenants will pay into a provision fund too. Sometimes costs of upkeep are paid for in rent from a tenant, but it will always depend on the contractual agreement of that particular block.

No customer will pay for another’s share of major works projects.

No, the contributions that you make will remain in the account and be used when large work is needed. You may wish to make an informal arrangement with your buyer to take this into account.

A buyer’s solicitor will always write to us and enquire about the provisions balance. If you’re a leaseholder, having a provisions fund will improve the sale ability of your property.

If you want clarification of what you are paying you can ask your service charge officer by contacting us on MyAccount. Information we provide can include items covered, life expectancy or the balance in the account.

If you are still not satisfied you will need to provide reasons why you think the charge is too high that are supported by evidence. Hyde may commission an independent survey report to review the charges that is supported by your evidence.

The result of the report will be binding on both sides, this could mean that the provision contributions decrease or increase depending on the report findings.

We know that major building work can have a big financial impact for customers paying service charges, so we’re introducing provision fund contributions for more customers from 1 April 2025.

By spreading the cost of planned works over the next 30 years, there’s less chance of you having to pay a big bill when work happens.

All new build properties have provisions set up as a matter of course. Older properties, particularly those that used to be owned by local authorities, now transferred, don’t normally have a provisions fund. This means that no money has been put aside for large works.

The work still needs to be done though, so we will consult as usual, complete the work, and then charge customers.  

Yes, if everybody in the building agrees, we can work with you to agree suitable contributions and remaining life expectancies on parts of the building that will require work in the future.