You want to buy a House in Germany but you cannot afford it and now you want to buy an apartment in Germany. The prices seem within your budget. But let me stop you here and ask have you considered the housing allowance or “Hausgeld” in Your calculations? In this article share why you shouldn’t buy an apartment in Germany without considering this important expense.
Apartment in Germany
What is Hausgeld?
So you are searching for an Apartment to buy in Germany and you find something that fits your budget perfectly. You scroll the listing and everything is great. 2 Rooms, a kitchen and a balcony all for €150.000. The location is also quite central. Thats good. You look at the hausgeld,its 300 odd euros. You ignore it and scroll over. But let me tell you this can be an expensive thing to ignore.
Housing Allowance or Wohngeld
Hausegeld or Wohngeld as it is referred to in Germany includes expenses for all costs incurred in connection with the maintenance and care of the property. Here you might say Ahsan I know there are additional costs to buying an apartment in Germany. Its about 10% additional to the buying costs. To that I would say yes there are additional costs but the Hausgeld is different.
According to Apartment Ownership Act ,
Hausgeld includes ongoing costs for cleaning, homeowner’s insurance, shared electricity in the apartment, and waste disposal. They also include janitor activities, garden maintenance, maintenance work on the elevator, or heating costs in the case of central heating.
In addition, there are other costs that you as the owner of an Apartment in Germany have to bear. These are, for example, the maintenance reserve of the Home Owners Association.
The maintenance reserve of the Home Owners Association is money set aside to take care of shared areas like the building’s exterior or the stairs. The reserve is also used to pay for things like painting the building or renovating the stairs. It covers administrative costs, like managing the association’s bank account.
This reserve is essential if there is a big renovation coming. For example the roof of the apartment needs to be renovated. The maintenance reserve will be used to fix the issue. If the bill is higher than the reserve, you can expect a huge additional payment by the end of the year from the Home owners accociation of your apartment!
How is Hausgeld calculated
So how exactly is the Housing allowance or Hausgeld calculated? Before I do that, please hit the like button if you are getting value from this video.
The property manager or the head of your apartment association decides how much money each homeowner needs to pay for housing expenses. They make a plan that includes all the money they expect to spend and receive. The difference between the expenses and income determines the housing allowance amount. The plan is decided upon at a meeting where the homeowners gather, and a majority vote is enough to approve it. After that, the manager sends out a statement to let the homeowners know how much they need to pay.
Average Hausgeld in Germany
On average, the housing allowance is between 2.50 and 4.50 euros per square meter. The amount each homeowner needs to pay is based on a distribution key, which is determined by their share of ownership. For example, if someone owns one-tenth of the house, and the total housing allowance for the whole property is 8000 euros, that person needs to contribute 800 euros to the reserve.
However, other costs like hot water and heating are not included in the housing allowance. These costs are calculated separately according to the Heating Costs Ordinance. It’s also possible to use different distribution keys for specific expenses if it’s fairer for everyone involved.
For example two apartments in the same building having almost the same size can have totally different hausgeld amount.
Buying an Apartment in Germany
So If you have bought an apartment in a building, you will receive an annual statement from the home owners association once a year. As part of this settlement, the wohngeld is offset against the costs actually incurred. So every apartment owner can expect either a refund or an additional payment of the housing allowance. If high deviating costs are found in the household allowance bill, the business plan for the next billing period is often adjusted.
Can you stop paying hausgeld?
You might ask yourself, is there a way of not paying the housgeld?
Unfortunately, this payment is mandatory and to be paid within due date according to paragraph 3 of the howe owners act § 28 Para. 3 WEG . And if this amount is not paid, the housing association can take legal action against you.
Hausgeld paid by tenant while buying an apartment in Germany
If you plan to rent the apartment, you can pass some of the costs to your tenant.
Items that can be passed on to tenants are, for example:
- Cleaning and care
- Heating costs including hot water
- Insurance costs
- Costs for shared facilities and rooms like :elevator, laundry and drying rooms, cable connection, etc.
- Caretaker fee
Part of Hausgeld not transferable to Tenant
Some costs cannot be passed on to the tenant. And must be paid by the owner like:
- Administrative costs
- Conservation reserve
- Repair and maintenance costs
Hausgeld is just one of the costs that need to be considered when buying real estate in Germany. You can read my guide on exactly How much house you can afford in Germany. If you want to know more about buying a House in Germany
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Disclaimer: None of the content in this article is meant to be considered as investment advice, as I am not a financial expert and am only sharing my experience with stock investing. The information is based on my own research and is only accurate at the time of posting this article but may not be accurate at the time you are reading it.