The maintenance reserve: What exactly it is, how much it should be, and what it's used for – learn more in this article. We'll explain everything you need to know about the maintenance reserve in a homeowners' association (WEG).
What is a maintenance reserve?Link to this section
The maintenance reserve, also known as maintenance provision, preservation reserveorRenewal fund is a shared savings fund within the homeowners association that is intended for future repairs.
The maintenance reserve is intended to ensure that the property retains its value. It also aims to protect owners from financial bottlenecks that can arise from suddenly occurring, high maintenance costs.
The legal basis for the maintenance reserve is found in Section 19, Paragraph 2, No. 4 of the German Condominium Act (WEG). According to this, it is part of proper management and can be claimed by the owners (Section 18, Paragraph 2, No. 1 WEG).
The most important things in brief:
Dedicated capital:The accumulated reserve may only be used for the maintenance and repair of the property.Legal anchoring:The Condominium Act (WEG) defines and regulates the maintenance reserve.Regular deposits:Each apartment owner makes a monthly contribution to the reserve, which is part of the maintenance fee.Common cause:The maintenance reserve is not an individual asset of individual owners, but serves exclusively the common interests of the entire community of owners.Administration:The property management is responsible for the administration and appropriate use of the reserve.
New WEG Act: From maintenance provision to preservation reserveLink to this section
Maintenance reserve, conservation reserveorRenewal fund... you'll find various terms in this article. The reason: The term "maintenance reserve" has become popularly used, while the term "maintenance provision" was used in the Condominium Act.
With the reform of the Condominium Act on December 1, 2020, the term maintenance provision was replaced by preservation reserve.
The change makes it clear that this is not just a theoretical reserve, but a concrete asset that can be used for the maintenance of the property.
Purposes of the maintenance reserveLink to this section
The maintenance reserve primarily serves to finance one-time costs for the maintenance of the common property. Here is an overview of typical uses and limitations:
Energy modernization:For theExample: facade insulation. The advantage: Reduces heat loss, lowers heating costs, improves climate controlRoof renovation:PossibleReasons for this are acute damage (e.g. due to storms) or agingHeating systems:For exampleRepair or replacement. This is particularly relevant in the context of the Building Energy Act (GEG) from 2024Facade renovation:For theExample of a new painting of the facade
The reserve may not be used for operating or administrative costs, insurance costs or repairs to the special property.
The amount of the maintenance reserveLink to this section
Although the German Condominium Act (WEG) recommends a "reasonable" amount, there is no fixed amount for the maintenance reserve, which leaves room for a customized solution. The legal basis is Section 21, Paragraph 5, No. 4 of the WEG.
In practice, however, in the Owners' meeting The amount of the reserve is decided upon as part of the annual budget. Typically, the property management makes a proposal for the maintenance reserve based on experience and a calculation. The goal is an appropriate reserve that meets the specific needs of the property.
These criteria are decisive for the amount of the reserve
The following aspects are taken into account when calculating and determining the amount of the renewal funds:
Legal minimum for the maintenance reserveAge of the propertyLocation of the propertySize of the propertyFeatures of the property (e.g. elevators, underground parking)Current condition of the building (new construction vs. in need of renovation)
Examples of cost-intensive measures as a guide
The amount of the maintenance reserve should take into account potential major expenses. For example:
Heating renovation:€6,000 to over €30,000Roof repair:Often five-figure amounts, for larger buildings up to €50,000Elevator installation:From 15,000 €, often significantly moreFacade insulation:Depending on the method from 50 € per square meter to 300 € per square meter
4 Methods for calculating the maintenance reserveLink to this section
Three calculation approaches have been established for calculating the amount of the maintenance reserve. Each of these methods has its specific strengths and is suitable for different scenarios. The choice of calculation method should be based on the available data and the characteristics of the property.
1. Calculation aid from social housing
Although the German Condominium Act (HÖG) does not stipulate fixed amounts for the maintenance reserve, homeowners' associations can base their calculations on the requirements for social housing. The Second Calculation Ordinance (Section 28, Paragraph 2, II. BV) provides guidelines: For buildings under 21 years old, a maximum of €7.10 per square meter per year is appropriate. For older buildings, up to €9 (22-32 years old) or €11.50 (older than 32 years) can be applied.
2. Percentage calculation
The percentage calculation is relatively straightforward and particularly suitable for new buildings. The method is based on a fixed percentage of the property value or construction costs. A guideline of 0.8% - 1.0% of the original purchase price is used here, starting from the completion of the property.
3. Peters' formula
The Peters formula provides a more precise calculation of the maintenance reserve and is particularly suitable for properties with known construction costs per square meter. This formula is based on the assumption that 1.5 times the value of the construction costs will be spent on maintenance over 80 years. Approximately 70% of the costs are attributable to the common property.
Basic formula of Peters’ formula:(Construction costs per square meter x 1.5) / 80 years = Annual reserve per square meterShare of common property:Annual reserve per square meter x 0.7 = reserve for common property per square meter
4. Derivation from the annual business plan
Calculating the maintenance reserve based on the annual financial plan is considered the most accurate and customized method. This approach takes the specific situation of the condominium association into account and allows for a customized solution.
The WEG administration analyses the following aspects:
Current reserve balance:How much money has been saved so far?Financial capacity of the owners:What contribution amount is affordable for the owners?Upcoming maintenance measures:What renovations or repairs will the property require in the near future?
The proposal will then be presented to the owners’ meeting for discussion and decision.
Read on: In this article you will learn all about the economic plan .
Renovation intervals
When deriving the maintenance reserve from the annual budget, it is important to know the expected renovation intervals and costs – i.e. when which repairs and maintenance or repair measures are necessary for a property.
This overview provides you with some orientation:
Roof and facade
Roof insulation:Every 30 years, approx. €15,000Roof covering:Every 50 years, approx. €20,000Renew exterior plaster:Every 15 years, approx. €15,000Exterior wall insulation:Every 15 years, approx. €25,000
Windows and doors
Window replacement:Every 15 years, approx. 500 € per windowPainting wooden windows:Every 7 years, approx. 1,000 €Door replacement:Every 20-40 yearsInterior door: approx. 200 €Exterior door: approx. 1,500 €
Interior
Electrical installations:Every 18 years, approx. €20,000New bathroom:Every 15 years, approx. €14,000New fitted kitchen:Every 15 years, approx. €12,000Flooring:Every 10-40 years, approx. €20 per m²
Energy systems
Replacing the heating system:Every 20 years, approx. €15,000Solar energy:Every 20-40 years, €10,000-30,000
Miscellaneous
Maintaining wooden parts and facades:Every 7 years, approx. €2,000Winter garden:Every 25-30 years, €1,500-2,500 per m²
Administration: Who manages the maintenance reserve?Link to this section
The WEG administration takes over the management of the renewal funds and takes care of the following tasks:
One of the most important tasks is determining the amount of monthly reserves. The management prepares a detailed proposal for this, based on a thorough analysis of the property's current condition and expected maintenance costs. This proposal is then presented to the owners for approval at the owners' meeting.
The condominium management is also responsible for ensuring compliance with the financial framework. This includes, in particular, monitoring the timely payment of reserve contributions by all condominium owners. To ensure a clear separation from other financial matters of the condominium, a separate reserve account is usually maintained. This account enables transparent accounting and facilitates monitoring of the use of funds.
Should individual owners fail to meet their reserve contributions, the management is obligated to initiate appropriate measures. This usually begins with a written warning. If the default persists, further legal action can be initiated, similar to those for outstanding maintenance fee payments.
Presentation in annual statement
According to the Federal Court of Justice (BGH) ruling (44/09), maintenance reserves must be listed in the annual financial statements as a separate asset report. This must be separated from the other income and expenses of the condominium association.
The presentation is based on actual payments received, not theoretical target amounts. To emphasize the availability of reserves for future maintenance measures, the term "maintenance reserve" is used. If parts of the reserve are missing, they are reported as "outstanding receivables" from the owners.
Maintenance reserve: Frequently asked questionsLink to this section
Can maintenance reserves be passed on to tenants?
No, maintenance reserves may not be passed on to tenants. The costs of the maintenance reserve are borne solely by the owner.
Is repayment possible if maintenance reserves are too high?
A maintenance reserve already paid is generally not repaid. However, there is the option to reduce the amount of future contributions by resolution of the owners' meeting.
What happens if I sell my apartment? Will I get paid out the maintenance reserve?
If you sell your condominium, you are not entitled to a payout of any contributions you have made to the maintenance reserve. This remains the property of the condominium association and is used to finance future maintenance measures.
Can I claim the maintenance reserve as a tax deduction?
The tax treatment of the renovation funds depends on whether you rent out your apartment or use it yourself. Only if you rent out the property can the actual expenditure be claimed as business expenses under certain conditions.
Credit financing fromMaintenance reserves: What is important here?
To finance major renovations that exceed existing maintenance reserves, homeowners' associations can decide to take out a loan. The loan is then repaid through additional contributions from the owners.
If individual owners are unable to cover their share of the loan costs, individual solutions can be found, such as taking out a personal loan.
What if the maintenance reserve is too high or too low?
The amount of the maintenance reserve can be adjusted to the actual needs of the homeowners' association. If the reserve is too low, the owners can decide on appropriate measures to secure the financing of necessary maintenance measures.
An excessive reserve can lead to unnecessarily high burdens for the condominium association. In this case, it makes sense to reduce the amount of the maintenance reserve. All condominium association decisions regarding the amount of the reserve are made at the owners' meeting.
Do you already know Ralph?
The maintenance reserve is an important financial buffer for your homeowners association. But how is it managed correctly? What measures can you take to ensure that your reserve is optimally used for the maintenance of your building?
Ralph supports you with all questions related to maintenance reserves. From calculating the optimal amount to transparent use – we ensure clarity and security.
