What is the sinking or reserve fund in a service charge?

The sinking fund, also called the reserve fund, is a mandatory part of the RERA-approved budget where money is set aside each year for major future capital works: lift replacement, facade repairs, repainting, fire-system upgrades and roof works. It typically accounts for around 5-10% of the budget and builds up in a separate account so owners avoid sudden large one-off bills.