Maintenance reserve WEG: Law, amount & use

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The maintenance reserve
Overview
Overview

The maintenance reserve: this article explains what exactly it is, how much it should be and what it is used for. We explain everything you need to know about maintenance reserves in a homeowners' association (WEG).

What is a maintenance reserve?

The maintenance reserve, also known as the maintenance reserve, maintenance reserve or renewal fund, is a common savings pot in the condominium owners' association that is intended for future repairs.

The maintenance reserve is intended to ensure that the property retains its value. The aim is also to protect owners from financial bottlenecks that can arise due to sudden, high maintenance costs.

The legal basis for the maintenance reserve can be found in Section 19 (2) No. 4 WEG. According to this, it is part of proper management and can be claimed by the owners (section 18 (2) no. 1 WEG).

The most important points in brief:

  1. Earmarked capital: The accumulated reserve may only be used for the maintenance and repair of the property.
  2. Legal basis: The German Condominium Act (WEG) defines and regulates the maintenance reserve.
  3. Regular payments: Each condominium owner makes a monthly contribution to the reserve, which is part of the house rent.
  4. Common property: The maintenance reserve is not an individual asset of individual owners, but serves exclusively the common interests of the entire community of owners.
  5. Management: The property management is responsible for the management and appropriate use of the reserve.

New WEG law: From maintenance reserve to maintenance reserve

Maintenance reserve, maintenance reserve or renewal fund... You will find various terms in this article. The reason for this is that the term maintenance reserve has become established in the vernacular, while the term maintenance provision was used in the WEG Act.

With the reform of the German Condominium Act on December 1, 2020, the term maintenance reserve was replaced by maintenance reserve.

The amendment makes it clear that this is not just a theoretical reserve, but a tangible asset that can be used to maintain the property.

Purpose of the maintenance reserve

The maintenance reserve is primarily used to finance one-off costs for maintaining the common property. Here is an overview of typical areas of use and restrictions:

  • Energy modernization: For example, facade insulation. The benefit: Reduces heat loss, lowers heating costs, improves climate regulation
  • Roof renovation: Possible reasons for this are acute damage (e.g. due to storms) or ageing
  • Heating systems: For example Repair or replacement. This is particularly relevant in the context of the Building Energy Act (GEG) from 2024
  • Façade renovation: Go to Example of repainting the façade

The reserve may not be used for operating or administration costs, insurance costs or repairs to the condominium.

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The amount of the maintenance reserve

Although the Condominium Act recommends an "appropriate" amount, there is no fixed amount for the maintenance reserve, which leaves room for a customized solution. The legal basis is set out in Section 21 (5) No. 4 WEG.

In practice, however, the amount of the reserve is decided at the owners' meeting and as part of the annual business plan. The property management usually makes a proposal for the maintenance reserve based on empirical values and a calculation. The aim is to achieve an appropriate reserve that meets the specific needs of the property.

The following 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 fund:

  • Legal minimum for the maintenance reserve
  • Age of the property
  • Location of the property
  • Size of the property
  • Features of the property (e.g. elevators, underground parking garage)
  • Current condition of the building (new build vs. in need of renovation)

Examples of cost-intensive measures for orientation

The amount of the maintenance reserve should take into account potential major expenses. For example:

  • Heating system renewal: €6,000 to over €30,000
  • Roof repairs: Often five-figure sums, up to €50,000 for larger buildings
  • Elevator installation: From €15,000, often significantly more
  • Facade insulation: Depending on the method, from €50 per square meter to €300 per square meter

4 Methods for calculating the maintenance reserve

Three calculation approaches have been established for calculating the amount of the maintenance reserve. Each of these methods has its own 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 construction

Although the Condominium Act does not stipulate any fixed amounts for the maintenance reserve, owners' associations can use the guidelines for social housing as a guide. The Second Calculation Ordinance (§ 28 Para. 2 II. BV) provides guideline values: For buildings under 21 years old, a maximum of € 7.10 per square meter and year is appropriate. For older buildings, up to €9 (22-32 years) or €11.50 (older than 32 years) can be applied.

2. percentage calculation

The percentage calculation is relatively straightforward and is particularly suitable for new builds. The method is based on a fixed percentage of the property value or construction costs. A guideline value of 0.8 % - 1.0 % of the original purchase price from completion of the property is used here.

3rd Peters formula

The Peters formula provides a more precise calculation of the maintenance reserve and is particularly suitable for properties with known production costs per square meter. This formula is based on the assumption that 1.5 times the value of the production costs will flow into maintenance within 80 years. Around 70% of the costs are attributable to the common property.

  • Basic formula of Peters' formula:
    (production costs per square meter x 1.5) / 80 years = annual reserve per square meter
  • Share 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 business plan is considered the most accurate and individualized method. This approach takes into account the specific situation of the condominium and enables a customized solution.

The WEG management analyzes the following aspects for this purpose:

  • Current level of reserves: How high are the funds saved to date?
  • Financial capacity of the owners: What level of contribution is affordable for the owners?
  • Upcoming maintenance measures: What renovations or repairs are required for the property in the near future?

The proposal is then presented to the owners' meeting for discussion and resolution.

Read on: In this article you will learn everything about the business plan.

Refurbishment intervals

When deriving the maintenance reserve from the annual business plan, it is important to know the expected renovation intervals and costs - i.e. when which repairs and maintenance or repair measures are required for a property.

This overview provides you with some orientation:

Roof and façade

  • Roof insulation: Every 30 years, approx. 15,000 €
  • Roof covering: Every 50 years, approx. 20,000 €
  • Renew exterior plaster: Every 15 years, approx. 15,000 €
  • External wall insulation: Every 15 years, approx. 25,000 €

Windows and doors

  • Window replacement: Every 15 years, approx. 500 € per window
  • Paint wooden windows: Every 7 years, approx. 1,000 €
  • Door replacement: Every 20-40 years
    • Interior door: approx. 200 €
    • Exterior door: approx. 1,500 €

Interior fittings

  • Electrical installations: Every 18 years, approx. 20,000 €
  • New bathroom: Every 15 years, approx. 14,000 €
  • New fitted kitchen: Every 15 years, approx. 12,000 €
  • Flooring: Every 10-40 years, approx. 20 € per m²

Energy systems

  • Replace heating system: Every 20 years, approx. 15,000 €
  • Solar energy: Every 20-40 years, € 10,000-30,000

Other

  • Maintain wooden parts and facade: Every 7 years, approx. € 2,000
  • Conservatory: Every 25-30 years, 1,500-2,500 € per m²

Management: Who manages the maintenance reserve?

The condominium administration takes over the management of the renewal funds and takes care of these tasks:

One of the most important tasks is to determine the amount of the monthly reserves. The management prepares a detailed proposal for this based on a thorough analysis of the current condition of the property and the expected maintenance costs. This proposal is then presented to the owners for approval at the owners' meeting.

The condominium management is also responsible for compliance with the financial framework conditions. In particular, this includes monitoring the timely payment of reserve contributions by all condominium owners. In order to ensure a clear separation from other financial matters of the condominium, a separate reserve account is usually kept. This account enables transparent bookkeeping and makes it easier to monitor the use of the funds.

If individual owners fail to pay their reserve contributions, the management is obliged to take appropriate measures. The first step is usually a written warning. If the delay in payment persists, further legal steps can be taken which correspond to those for outstanding house payments.

Presentation in annual financial statements

According to the BGH ruling (44/09), maintenance reserves must be listed in the annual statement of accounts as a separate asset report. This must be distinguished from the other income and expenditure of the condominium owners' association.

The presentation is based on actual payments received, not on theoretical target amounts. In order to emphasize the availability of reserves for future maintenance measures, the term "maintenance reserve" is used. If parts of the reserve are missing, these are shown as "outstanding receivables" from the owners

Maintenance reserve: Frequently asked questions

Can maintenance reserves be passed on to the tenants?

No, maintenance reserves may not be passed on to the tenants. The costs for the maintenance reserve are borne solely by the owner.

Is a repayment possible if the maintenance reserves are too high?

A maintenance reserve that has already been paid is generally not repaid. However, it is possible to reduce the amount of future contributions by a resolution of the owners' meeting.

What happens if I sell my apartment? Will I get the maintenance reserve paid out?

If you sell your condominium, you are not entitled to a payout of your previous contributions to the maintenance reserve. This remains in the possession of the condominium owners' association and is used to finance future maintenance measures.

Can I claim the maintenance reserve for tax purposes?

The tax treatment of renewal funds depends on whether you rent out your home or use it yourself. Only in the case of renting can the amounts actually spent be claimed as income-related expenses under certain conditions.

Loan financing of maintenance reserves: what is important here?

In order to finance major renovation measures that exceed the existing maintenance reserve, owners' associations can decide to take out a loan. The loan is then repaid via additional contributions from the owners.

If individual owners are not in a position to bear 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 community of owners. If the reserve is too low, the owners can decide on appropriate measures to ensure the financing of necessary maintenance measures.

An excessively high reserve can lead to unnecessarily high charges for the condominium. In this case, it makes sense to reduce the amount of the maintenance reserve. All WEG decisions on 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 community of owners. But how is it managed correctly? What measures can you take to ensure that your reserve is used optimally for the maintenance of your building?

Ralph supports you with all questions relating to the maintenance reserve. From calculating the optimum amount to transparent use - we provide clarity and security.

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