Community Charge - Homeowners Fee : "Hausgeld"

What does the Community Charge include?
Definition of Hausgeld = Service Charge, Maintenance Allowance or Monthly Building Management Fee:
When you own an apartment in Germany, you pay a monthly charge which includes:
"Communal expenses", such as lighting (entrance, staircase), expenses for lift / elevator, electricity, caretaker, rubbish / garbage collection, bio-rubbish disposal, cleaning of building and staircase, snow ploughing, gardening, general maintenance, house insurance, sewage water, cold water, management fee and contribution towards community (sinking) fund. These are called "cold" charges - or "kalte Betriebskosten".
Then you have the "warm" cost, which is heating and hot water. These tend to be the most expensive positions of the monthly service charge.

Who pays the community charge - the owner or the tenant ?
In general terms, if the property is tenanted, the tenants pays 70-80% of the Wohngeld. The items the tenant does not pay is the building management fee (17-20€/month), minor maintenance of the building, and the contribution towards your community fund.

The tenants pays base rent (also "cold" rent) plus a prepayment towards Community Charge (heating/water etc).

Meter readings: There are individual meters for consumption of cold and hot water in your apartment. Each radiator also has a meter to ensure correct attribution of cost. Each meter has a unique number for identification purposes, so no confusion can occur. The condominium administrator arranges meters to be read on a yearly basis and issues the correct invoice which indicate accurate individual consumtion of each apartment.
If the tenant has prepaid too much over the year, he/she will get some money back, if he/she did not pay enough, there will be an additional charge.

Contribution towards Community Fund also called "Reserve Fund"
It is important that a property is well managed and therefore a monthly payment towards the Community Fund or Reserve Fund should be made. In German it´s called "Rücklagen" or "Instandhaltungsrücklage" which means "Reserves for Contingencies".
This money is being used when major refurbishments or renovations of the building are necessary.

Deducting the contribution towards your Reserve Community Fund from your rental yield calculations would be a mistake:
Sooner or later, you will have to spend some money on renovation, regardless if you own the entire building or a single apartment. Instead of having to pay a lump sum in one year and nothing next year, this contribution helps to spread the payments.
It also protects proprietors from insolvent co-owners. What would happen if in the year 2010, the community decides that you want to paint the façade and accidentally have one owner who does not pay at that time? Monthly contributions ensure that these expenses are being spread equitably among all co-owners.

The only position that affects your long-term yield is the administration fee.
The contribution towards the reserve fund does not affect your long-term yield since you maintain the building in decent condition which is later reflected on the sales price when you want to sell the property.

Compare it with owning a house: If you own house, you also make repairs. You might even work on it yourself. You might paint the façade, you might buy new garden plants or make other improvements without even counting the money you spend. When you own an apartment, all the expenses are already accounted for by the building administrator.

Easy maintenance:
Owning a tenanted apartment is completely hasslefree: Your rental manager will take care of everything. You don´t have to do anything except wait for your monthly surplus payments (rent minus charges) to be credited on your bank account in your country of residence.
If you use the apartment yourself, you issue a standing order on your bank account and the management agent will deal with everything.
Owning a property in Germany is very easy. Everything will be taken care of by the management agent. It´s a hassle free "hands-off" operation.