When you finally find that perfect property in Germany, you’ll likely want to close the purchase as soon as possible. Before you do, though, it’s important to consider what the property will cost you over the long-term.

Ongoing home maintenance costs can quickly add up. So, what should prospective buyers know about ongoing property maintenance costs?

What property maintenance costs is an owner responsible for?

Overall, costs generally depend on the property itself. Factors like property structure and location will determine heating, electricity and property taxes. Still, a little research can help you budget for common property maintenance costs.
German language resources like immowelt.de offer good advice about ongoing maintenance costs. Here, we list the most common and significant costs that you’ll encounter. On average the costs amount to 

Management company fees

Many neighborhoods or apartment complexes in Germany have a homeowner association. When you buy an apartment, you become a member of the homeowner association and must pay monthly or yearly fees.
These fees pay for regular maintenance and repairs in common areas like the entryway, stairwell, elevator or attic. Normally each homeowner pays between €20 to €30 euros per unit per month.

Maintenance costs

Often German homeowner associations set up maintenance funds for planned renovations and repairs. As a rule, each homeowner association will vary on the amount of money they will hold in a maintenance fund.
Statutory regulations on the amount held in maintenance funds are only in effect for social housing. Paragraph 28 of the Second Calculation Regulation (paragraph two) requires no more than €7.10 per square meter per year for buildings up to 22 years old. For houses less than 32 years old, the maximum is €9. For older buildings, the upper limit is €11.50. Any increases to the amount must be limited to €1 per square meter per year.

For example, if you buy a 100 square meter apartment, you should calculate between €710 and €1,250 for maintenance costs per year. You cannot transfer these costs to a tenant.

Unexpected repairs and renovations

It’s important to distinguish between planned renovations and unscheduled repairs. Planned renovations to the residence will usually come out of the homeowner association maintenance fund as shown above.
Otherwise, an unscheduled repair might require a special contribution if the reserve is insufficient. These are costs that the owner can’t influence or plan, like damage caused by natural events that are not covered by insurance. A case in point is when the homeowner association might need to unexpectedly repair the street and so asks for a special contribution.

Utilities

Another common ongoing cost for a German apartment is utilities. Standard utilities commonly refer to water, heat and trash collection. As a rule, the property owner’s homeowner association fees cover utilities such as water or heat. An individual account is usually necessary for utilities like gas and electricity.

If you plan to rent out the apartment, know that Germany has two types of rental structures:

  • Kaltmiete is a rental fee that doesn’t cover the additional costs (Nebenkosten) mentioned above, with the addition of property taxes.
  • Warmmiete is a rental fee that does cover additional costs.

What other ongoing property costs should the buyer consider?

Interest and amortization for the mortgage

Naturally, the owner alone will bear the cost of a real estate loan. However, buyers should also take into account the possibility that interest rates may rise if they refinance after the fixed-interest period expires. This will raise the overall monthly payment for the mortgage.
If the fixed-interest period expires and you have to refinance at higher interest rates, you cannot pass these costs to the tenant.
For instance, if you take out €100,000 in a mortgage with 2% interest rate, the monthly payment is €333. After 10 years, the remaining debt will be about €78,000. If the interest rate then rises to 8% on the remaining €78,000, the new monthly payment will nearly double to €600.
Homebuyers should make regular special payments as much as financially possible to reduce the risk of rising interest rates. Many banks offer the option to pay up to 5% of the original loan per year. Although this increases the ongoing cost burden on the owner, it pays off long term.
To find out how much you will pay per month for a mortgage, use LoanLink’s mortgage calculator. The exemplary mortgage calculation is also helpful to understand how you can pay off your mortgage.

Conclusion

Ultimately, the running costs for maintaining an apartment are higher for owners than for tenants. But planning ahead can ensure that ongoing property maintenance costs do not come as an unpleasant surprise. And, once the apartment is paid off, the owner can enjoy the profit of a good investment!