35Sinking fund for major repairs and maintenance

35 Sinking fund for major repairs and maintenance If a retail shop lease provides for the establishment of a sinking fund to fund provision for major items of repair or maintenance, the lease is taken to include provisions to the following effect: (a) an amount paid by the tenant in respect of the landlord's outgoings on account of those major items of repair or maintenance is to be paid into the sinking fund; (b) so much of the balance standing to the credit of the sinking fund as remains unexpended from time to time for a purpose for which the sinking fund was established is to be held by the landlord in an account bearing interest; (c) amounts paid by the tenant for credit of the sinking fund, and the net interest earned by the landlord on the sinking fund, are not to be applied by the landlord for a purpose other than payment of outgoings for which the sinking fund was established; (d) the landlord is liable to contribute to the sinking fund a deficiency attributable to a failure by the landlord, or a predecessor in title of the landlord, to comply with paragraph (c); (e) the major items of repair or maintenance for which contribution to the sinking fund may be required by the tenant are limited to repair or maintenance of: (i) a building, or plant and equipment of a building, in which the retail shop is situated; or

Business Tenancies (Fair Dealings) Act 2003 30 (ii) if the retail shop lease relates to a retail shop situated in a retail shopping centre – the buildings, plant and equipment and areas used in association with the retail shopping centre; (f) the tenant is not liable to contribute an amount to the sinking fund that is greater than the maximum amount permitted under the Act; (g) the landlord must keep full and accurate accounts of all money received or held by the landlord in respect of the sinking fund; (h) the landlord must give the tenant, not later than 3 months after the end of each accounting period of the landlord during the term of the lease, a sinking fund statement containing details of expenditure during the period from the fund on items for which the tenant is required to contribute; (i) the landlord must provide with the statement mentioned in paragraph (h) a report on the statement prepared by a person who holds a public practice certificate issued by an accountants body; (j) a sinking fund statement provided by a landlord to a tenant is to be prepared in accordance with the relevant principles and disclosure requirements of applicable accounting standards.