Property management accounting: what owners need to know

What is the housekeeping statement?

The statement of charges, also known as the WEG statement, provides homeowners with information about all payments made by the homeowners' association. In this way, you can find out what your house money has been used for and whether you still have to make additional payments for operating costs or whether you will receive refunds. The property management company is responsible for preparing the statement of charges.

What is the house allowance?

The house allowance is a monthly advance payment made by the owners. It is comparable to the advance payment of service charges for tenants, but contains additional items and is higher. The house allowance for your apartment is paid into a communal WEG account and is intended to cover the running costs of the property. The house allowance is therefore a provision for future expenses.

Important: When buying a condominium, in addition to the purchase price and financing, you should also consider the monthly house allowance. This can have a significant impact on your monthly expenses.

What are the items of the house charge statement?

The condominium fee statement provides an overview of all income and expenses of the condominium owners' association and lists transparently whether and which additional payments or reimbursements are due to the owners. In short, the statement of condominium expenses is, so to speak, a statement of ancillary costs for owners.

There is no formal template for the property management statement, which is why the property management statements can look different from one property management company to the next.

However, the following contents must be stated on a statement of charges:

• All expenses and income of the WEG for the financial year
• Accumulated reserves and account balances
• Individual accounts for each apartment owner
• The distribution key used

The individual items of the house fee are allocated to the owners according to a specific distribution key in order to determine the individual house fee payments.

Total billing vs. individual billing

The settlement of the house rent can be divided into total settlement and individual settlement.

The overall settlement

The total statement of property charges provides a complete overview of the condominium's financial activities in the past financial year. It includes:

• Revenue:
  • House payments: Regular contributions from the owners to cover the common costs.
  • Rental income: Income from the letting of jointly owned property (e.g. commercial units).
  • Interest income: Income from invested reserves.
• Expenditure:
  • Maintenance: Costs for repairs, renovations and modernization of the common property.
  • Operating costs: Costs for heating, water, electricity, waste disposal and other ongoing operating costs for communal areas (e.g. stairwell, cellar).
  • Management costs: Costs for property management, including fees, wages and insurance.
  • Insurances: Costs for building insurance, liability insurance and other insurance for the common property.
• Reserves:
  • Additions: Amounts added to the maintenance reserve.
  • Withdrawals: Amounts withdrawn from the maintenance reserve (e.g. for major repairs).

The overall statement shows how the community's money was received, what it was spent on and how the reserves have developed.

The individual statement

The individual statement of house charges refers to the individual apartment owners and shows how the total costs are distributed among each apartment owner. It contains information about:

• Advance payments: The house payments made in the past year are listed in detail.
• Cost distribution: Each owner recognizes his/her individual share of the total costs.
• Additional payments/credits: It is clear whether amounts still have to be paid or whether a repayment has been made.
• Future payments: The amount of future advance payments will be adjusted on the basis of the current statement.

The individual statement enables each owner to track his/her personal financial contribution to the common costs.

Who pays the house rent?

The homeowners' association is responsible for the amount of the house fee on a pro rata basis. The respective share results from the so-called co-ownership shares (MEA) of each owner. In some cases, a different distribution key has been decided in the past, which is used for the house fee settlement. You will always find the distribution key used listed in your statement.

The property management is responsible for the preparation of the statement of property charges

According to Section 28 WEG, the property management company of the condominium is responsible for settling the house fees and presenting them at the owners' meeting. The property management company must also be available for any queries. The owners receive both an overall statement and an individual statement. The owners can see from the individual statement whether there are any back payments or repayments.

Tip: If your property management company is repeatedly late with the preparation of the property management statement or if the statement frequently contains serious errors, this is a good reason to change the property management company. Late property management statements entitle COAs to terminate the property management contract with immediate effect. 

How much is the house money?

The amount of the house rent varies and depends on the individual characteristics of the property. These aspects include the energy source, the state of renovation, the location of the building, the region, the year of construction, the size and many other factors. The presence of special features such as elevators or surveillance cameras can also affect the amount of the house rent.

The amount of the house fee varies depending on the residential complex

The amount of the house fee depends on various factors. Each property has its own special features that have a direct impact on the amount of the house fee. Here are the most important factors that influence the amount:

• Location: urban areas vs. rural regions
• Attractiveness of location: Popular areas can cause higher costs
• Age of the property: Older buildings can entail higher maintenance costs
• Building size: Extensive facilities such as underground garages or outdoor facilities increase costs
• Technical equipment: Special facilities such as elevators or security systems increase the house price

 In total, you can expect to pay between 3 and 4.50 euros per square meter per month for your condominium.

No statutory deadline for the house rent, but usually by the end of June at the latest

There is no statutory deadline for the preparation of the statement of property charges. According to the law on the WEG annual statement, it only has to be prepared "after the expiry of a reasonable period after the end of the business year". In most cases, we are talking about three to six months. After all, the owners must be given enough time to prepare the service charge statement for the tenants before the end of the year.

As a rule, you will receive your statement of charges together with the invitation to the annual owners' meeting. At the owners' meeting, you can then decide on the statement of charges and the maintenance reserve. The additional payments and refunds are only due after the property maintenance account has been approved. Find out our 5 best tips for saving house money here.

Service charge vs. utility bill: what's the difference?

As the owner of an apartment in a condominium owners' association, you often come into contact with the terms "Hausgeldabrechnung" and "Nebenkostenabrechnung". What is the difference between them?

Here's a simple tip: When settling the house allowance, administrators usually differentiate between:

• Allocable costs: As the landlord of an apartment, you can allocate these to your tenants and pass them on in the annual service charge statement. Typical items are heating costs, water and waste disposal charges. They are charged to your tenants in the annual service charge statement.
• Non-allocable costs: As the landlord, you bear these costs yourself. These include, for example, administration costs, insurance costs or reserves for major repairs. These costs are not to be shared with the tenants.

While the statement of service charges is your personal annual statement as the owner, the statement of service charges is for your tenants. It is based on your property charges and shows the service charges attributable to the tenants.

House allowance vs. annual statement: what's the difference?

The annual statement of accounts is also an important document for your community of owners. It provides a detailed overview of the finances for the past twelve months. In addition to the expenses for current items, such as cleaning and maintenance, it also shows how the reserves have developed. The annual statement for your community of owners usually contains the following items:

Revenue

• House payments: The regular payments made by all condominium owners to cover the common costs.
• Rental income: If the WEG has rental properties, the rental income is listed here.
• Interest income: Income from invested reserves or short-term investments.
• Revenue: All other income that cannot be allocated to the above categories.

Expenditure

• Maintenance: Costs for repairs, renovations and modernization of the common property.
• Operating costs: Costs for heating, water, electricity, waste disposal and other ongoing operating costs.
• Management costs: Costs for the condominium manager, including fees, wages and insurance.
• Insurances: Costs for building insurance, liability insurance and other insurances.
• Cleaning/garden maintenance: Costs for cleaning communal areas and maintaining gardens.
• Other expenses: All other expenses that cannot be assigned to the above categories.

Development of the maintenance reserve

• Opening balance: The level of the reserve at the beginning of the financial year.
• Additions: Amounts added to the reserve during the year (e.g. from the house allowance).
• Withdrawals: Amounts withdrawn from the reserve (e.g. for major repairs).
• Ending balance: The balance of the reserve at the end of the financial year.

Account balances of the apartment owners

• Advance payments: The advance payments made by the owners towards the house rent.
• Actual share of costs: The share of the total costs attributable to each owner.
• Additional payments/credits: The amount that the owner must pay in arrears or that is credited.

Balance sheet

• Overview of the overall financial situation of the COA: A clear presentation of the income, expenses and assets of the COA.

Appendix

• Detailed list of costs: A detailed list of all individual costs with corresponding receipts.
• Minutes/resolutions of the owners' meeting: Minutes of the owners' meetings at which decisions were taken on the use of the funds.

What to do in case of late and/or erroneous house charge statements?

One of the statutory duties of every property management company is to prepare an annual statement of property charges and present it for resolution at the owners' meeting. This is regulated in § 28 para. 3 WEG Act. If your current property management does not comply with this duty, this is a reason for termination without notice. We will be happy to advise you individually on this. As a condominium owner, you have a claim to the presentation of the statement of property charges, which you can assert in court in case of doubt.

In order to rule out the possibility of an erroneous house charge statement, you may check the contents for the following points:

• Do the expenses and bills actually belong to your COA?
• Is the recipient of the invoice correct?
• Are the figures right?
• Do the costs match the invoices?
• Have the entries been assigned to the correct G/L accounts?
• Was the offered discount taken advantage of if the order was placed quickly (cash discount reductions)?
• Are there still allocable costs?
• Were non-apportionable costs apportioned?
• Are the advance payments correct?

Let Ralph prepare your housekeeping fee statement

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