Annual Sinking Fund Provision for Financing Planned Maintenance of Rented Private Residential Properties in Minna, Nigeria

Abstract

Real properties require maintenance throughout their lifecycle until they are replaced at the end of their useful life. Maintenance is also necessary to slow the rate of deterioration in real properties and to restore them to normalcy when the deterioration has occurred. Most property maintenance plans have failed due to lack of financial planning, resulting in unavailability of finance for the execution of maintenance works at the expected date. This paper examines annual sinking fund provision for financing planned maintenance of rented private residential properties in Minna, Nigeria. Primary data for the study were collected from 52 rented private residential properties managed by 6 real estate firms in the city. Results of data analysis reveal that most residential tenements and bungalows under study are in bad state of disrepair as a result of inadequate maintenance. The paper argues that inadequate maintenance of the properties is due largely to unavailability of finance among other problems, arising from the non-provision for annual sinking fund required for planned maintenance of the properties by their owners and occupiers. The paper concludes that provision for annual sinking fund by property owners and occupiers in Minna is necessary for the achievement of effective maintenance of rented private residential properties in the city.