After buying a condominium, monthly service charges are incurred. Find out what the service charge is, how it is calculated and what you need to pay attention to as the owner of a condominium.
What is house rent and what costs are covered by the term?
The house allowance is an amount that must be paid by the owner of an apartment. It is to be distinguished from other ancillary costs, such as water or electricity, and is often commonly equated with the term “housing benefit”. However, this is not correct, as housing benefit comprises a rent subsidy that families with a low income receive as a state social benefit. House allowance, on the other hand, is an amount that must be paid by the owner of an apartment to the manager of the residential complex.
The contribution is due monthly, but is settled at the end of the year. The service charge for an apartment is on average 20% to 30% higher than the service charges that the owner can charge the tenant. This is therefore an item that can be quite significant and should definitely be taken into account before buying a property.
The house fee is made up of the operating costs and other costs and can be broken down as follows:
Operating costs that can easily be passed on to the tenant of the condominium.
- These include, for example, conventional ancillary costs such as electricity, heating (in the case of central heating) and water and sewage charges.
- However, there are also fees for waste disposal, winter services, elevator maintenance, homeowners’ insurance, janitor and stairwell cleaning.
Other costs that cannot be charged to the tenant of the condominium are:
- Maintenance reserve: Renovation and maintenance work must be carried out on the jointly used areas of the building or residential complex. These are financed jointly by all owners, resulting in fixed monthly contributions.
- Administration costs: The administrator of the residential complex must be paid, for which all owners are jointly responsible. There are also costs for the management of the homeowners’ association account.
The following costs are not included in the house rent
As you have learned, the term “house allowance” covers a number of items. However, there are also expenses that are incurred when owning a condominium that are not part of the house allowance. These are, for example, the property taxes that each owner of an apartment pays directly to the local authority. Landowner’s liability insurance is also paid directly and is not included in the house allowance.
Private expenses are individual electricity costs, as well as telephone and internet costs. Each household must pay the GEZ fees itself. They are not paid by the owner of the apartment.
What monthly costs can be incurred for a condominium?
In the past, condominium owners had no way of gaining an insight into the house fees of different residential complexes. They were informed of the amounts for their own condominium, but were unable to compare these with other apartments and see whether the amount of house money was appropriate.
In 2005, light was shed on the subject for the first time. As part of a study, the amount of house rent was determined throughout Germany and made public in a report. At that time, the average figure was €2.60/m 2. However, the costs could also rise to up to € 4.53/m 2 increase. However, it should be emphasized that these figures are by no means up to date.
In principle, some general information can be given about the approximate amount of the house allowance. However, it is not possible to make precise, universally valid calculations because many items are determined on a highly individual basis. Even within the same building complex, different contributions are paid.
The following items, for example, are included in the calculations:
- Average operating costs (€ 2.17/m2 (as at 2018))
- Maintenance reserve (€ 0.59/m2 to € 1.04/m2)
- Management costs: these are completely variable and are calculated per residential unit.
These variables result in an average house rent of € 3/m for 20182 to € 4.50/m2.
How is the maintenance reserve calculated?
The appropriate amount of the maintenance reserve for a residential complex is defined in the Second Calculation Ordinance is defined.
For old buildings and buildings over 32 years old, the maintenance reserve is € 0.95/m2 per month.
For buildings between 22 and 32 years old, the value is € 0.75/m2 per month. For new buildings and buildings that are less than 22 years old, the maintenance reserve is €0.59/m 2.
Overall, the maintenance reserve is lower for new buildings because it is highly unlikely that renovations will be necessary in the coming years. However, the amount also depends on the features of the building complex in which the condominium is located. If it is a complex with a swimming pool, large common room and elevator, the maintenance costs will be significantly higher than for a simpler building.
How do the planning and payment of the house money work?
The amount of the house fee is determined by the administrator of the residential complex. He derives the costs from the economic plan, which is drawn up annually and must be presented at the owners’ meeting. The maintenance reserves are shown separately.
If an owner does not agree with the amount of the house fee, they can submit a request for a change, which must be approved by a simple majority of the owners’ meeting.
The total costs can be converted to the individual condominiums using various keys. In the case of equally sized residential parties, for example, the total costs are divided by the number of apartments. The individual factors can be subject to different keys. Examples include the number of square meters of the condominium or the number of people living in the household.
If you own a condominium and want to rent it out, you should calculate the individual service charge items according to the same keys as are used at building level. This will save you complications and misunderstandings. The exact details should be broken down in the rental agreement.
Homeowners have much less freedom than the owners of a house. They have to bow to the majority and have little say in the organization of ancillary costs. You should definitely take this into account when buying a property.
If the house allowance calculated in advance was lower than the actual costs incurred, a repayment will be made. However, additional payments may also be necessary if your consumption did not correspond to the calculation of the house allowance for your condominium.
Conclusion
Before concluding a purchase agreement, you should definitely analyze which renovation and maintenance measures need to be carried out on the residential building complex in the near future. Don’t just rely on your own assessment, but also include the economic plans and, if in doubt, commission an expert to give you the best advice and point out potential cost traps.
The house fee is an item that you should not underestimate under any circumstances, as it can sometimes lead to you exceeding your financial means.
