Offshore 2 Offshore

* Estate Management: Where are the sinking funds?







As the housing estates built in the early 90’s come of age management companies are issuing large bills for repair works. In one case recently a flat owner got a bill for £9,000 as his contribution for urgent waterproofing and painting of a block of flats.

Though most under leases require management companies to set up “sinking funds” to accumulate money over a period of years to provide for major repair and redecoration work, many have neglected this obligation in favour of keeping service charges low. Now they face large bills and look to residents to come up with the short falls.

Government has stepped in to help by making deals on ground rents payable to the crown by pardoning a proportion of those rents against proof of capital expenditure on buildings.

However the large repair bills have come at a particularly bad time, coupled with increases in interest rates with many recent owners having paid record amounts for their homes during an extended period when demand has sharply over taken supply.

The current building boom has also meant that building contractors are able to charge very high amounts for even minor works.

An executive at Charles Gomez & Co says that in order to rein in costs, Gibraltar’s management companies should combine to ensure that they are able to get the best prices for all their contract requirements from cleaning services, to insurance, security and major works.

“The management companies certainly have the muscle; the ones in the Westside reclamation alone account for over 2,000 flats. If they were to form a co-operative they would become one of the largest entities in Gibraltar”

Once the current problem is solved, management companies will need to adhere to strict implementation of spending policies.