Anyone who owns a condominium usually thinks of living comfort or appreciation in value. But one point often goes unnoticed: the reserves. They are the financial foundation of every condominium community and without them, things can quickly become expensive.
Whether it’s the roof, heating or façade: at some point, major maintenance is always due. With a solid maintenance reserve, you can plan for such costs without suddenly being asked to pay. It is the buffer that protects the value of the property.
Older houses in particular show how important it is to plan ahead. If you build up reserves early enough, you remain capable of acting and avoid unpleasant surprises at the owners’ meeting.
What does reserve actually mean for a condominium?
A condominium is more than just your own living space – it is part of a whole. And this whole needs to be looked after, maintained and, at some point, renovated. This is exactly where the reserve comes in.
Definition and meaning
The so-called maintenance reserve (often also called maintenance reserve or maintenance reserve ) is the financial cushion of the community of owners.
It is used to finance future repairs or major modernizations to the building.
- Roof, facade, windows
- Heating and water pipes
- Elevator, stairwell, outdoor facilities
In short: common property costs money. And without a maintenance reserve, every major repair would be a financial risk for all owners.
Legal basis of the maintenance reserve
The formation of a reserve is stipulated in the German Condominium Act (WEG).
Section 19 (2) no. 4 WEG stipulates that owners “must form an appropriate maintenance reserve”.
The goal is clear:
- Maintaining the value of the building
- Cushion unforeseen costs
- Avoid disputes and special levies
A brief but crucial point: the reserve does not belong to the property manager, but to the community of condominium owners (WEG). The manager only manages the money on a fiduciary basis.
How does a maintenance reserve work in practice?
Each owner pays their share into the common fund on a monthly or quarterly basis.
The amount is usually based on the co-ownership share, i.e. the size of the apartment.
Example (simplified):
| Owner | Living space | Share according to declaration of division | Monthly reserve amount |
| Apartment A | 80 m² | 12 % | 96 € |
| Apartment B | 60 m² | 9 % | 72 € |
| Apartment C | 120 m² | 18 % | 144 € |
The money remains in a separate account of the community and may only be used for approved maintenance measures.
Why are reserves so important?
A solid reserve is not a luxury, but a kind of insurance.
It ensures that the house remains well maintained, that decisions are not postponed – and that nobody is shocked at the next owners’ meeting when a new boiler is suddenly due.
It is particularly crucial for older buildings. Without sufficient maintenance reserves, even minor damage can quickly become a major financial problem.
Secure the value of your property
Receive well-founded assessments of reserves, maintenance strategies and market opportunities in Dresden – individually, transparently and personally.
Get advice from a real estate agent in Dresden now
Amount of the reserve: How high should the maintenance reserve be?
Probably the most frequently asked question among homeowners: How much is enough?
Too low a reserve causes financial bottlenecks, too high a reserve blocks capital unnecessarily. The right balance depends on several factors.
What factors influence the amount of reserves?
There is no general rule, but there are clear points of reference. The amount of the maintenance reserve essentially depends on:
- Age of the building: The older the building, the higher the reserve requirement.
- Condition and equipment: A new build with modern building services initially costs less.
- Size and use: More parties – higher total costs, but shared burden.
- Type of building: terraced house complex, apartment building or residential park – each structure brings its own challenges.
- Construction method: Energy-efficient or sustainable construction methods (e.g. KfW standard) reduce maintenance costs in the long term.
Tip: For older properties, it makes sense to regularly check whether the amount of the maintenance reserve corresponds to the current condition. VIAREALIS® recommends that owners in Dresden have a revaluation carried out by the property management company or an expert approximately every three years.
Peters’ formula – a proven guideline
Peters’ formula is often used to roughly calculate the necessary maintenance reserve.
It is based on many years of experience and takes into account the construction costs, age and remaining useful life of the building.
Formula:
Annual maintenance reserve = (production costs × 1.5 %) ÷ remaining useful life
In practice, this is usually converted to square meters.
A realistic guide value is between €0.80 and €1.50 per square meter of living space per month.
Sample calculation:
| Living space | Building type | Reserve per m²/month | Monthly reserve |
| 70 m² | New building | 0,80 € | 56 € |
| 70 m² | 15 years old | 1,10 € | 77 € |
| 70 m² | 30 years old | 1,50 € | 105 € |
What happens if the reserve is too low?
Owners then have to make additional payments – usually via a special levy.
This can quickly run into four figures if, for example, the roof needs to be renovated or the elevator modernized. An insufficient reserve can also reduce the value of the property when selling, as prospective buyers pay attention to the financial situation of the community.
A stable reserve fund is considered a quality feature by many buyers – similar to a well-maintained façade or well-organized property management.
Further tip
Many owners confuse the maintenance reserve with the monthly house allowance. While the house allowance covers running costs such as operation, insurance or administration, the reserve is intended exclusively for long-term maintenance measures.
You can find out more about this in the article
“What is house money? Calculating condominiums correctly”
Calculating the maintenance reserve – how it works
Calculating the maintenance reserve is not rocket science, but it should be realistic and comprehensible, and many owners’ associations base their calculations on empirical values or recommendations from the property management company. It is crucial that the contributions cover the expected maintenance costs in the long term.
Essentially, the calculation depends on three things: the construction costs, the age of the building and the remaining useful life. Many administrations base their calculations on an annual share of around 1 to 1.5% of the original construction costs. This results in a total annual sum that is distributed to all owners on a pro rata basis – usually according to living space or co-ownership share.
An example:
An apartment building with eight apartments was built 15 years ago, the construction costs amounted to around two million euros.
If 1.2 % maintenance reserve per year is assumed, this results in an annual sum of € 24,000, i.e. around € 2,000 per residential unit. Broken down by living space, this results in
| Apartment | Living space | Monthly reserve Contribution per m² |
| 60 m² | 34 € | 0,57 € |
| 85 m² | 48 € | 0,56 € |
| 110 m² | 63 € | 0,57 € |
The reserve is therefore in the middle range and covers the usual maintenance of a younger building well. The requirement for older houses is significantly higher – a rate of between €1.2 and €1.5 per square meter per month is often recommended here.
The difference to the house allowance is important:
The house allowance covers running costs such as cleaning, insurance or administration. The reserve, on the other hand, remains untouched until major repairs or modernizations are due. Many owners confuse the two – and later wonder why there is no money for roof renovation despite regular payments.
If you would like to know how house money and reserves complement each other, you will find a detailed overview with sample calculations in the article “What is house money? Calculating condominiums correctly” for a detailed overview with sample calculations.
Ultimately, a good reserve strategy is always a middle way: enough to maintain the building in the long term, but not so much that capital remains unused. As a guide: 0.8% to 1.5% of the current value of the building per year is a healthy range – depending on the condition, age and energy standard of the property.
Use of the maintenance reserve – when can the money be used?
The maintenance reserve is not a savings account for nice ideas. It is earmarked for a specific purpose – and exclusively for the maintenance of the common property.
Permitted uses
The money from the reserve may only be used for necessary maintenance or repairs. This includes, for example:
- Renovation of roof, façade or stairwell
- Replacement of defective heating or water pipes
- Repair or modernization of elevators
- Repair of underground parking, outdoor facilities or common areas
Modernizations are only permitted if they are required by law or are necessary to maintain the building – for example, new insulation in accordance with energy standards or fire protection measures.
What many people overlook: Pure improvements (e.g. new garden design or decorative elements) may not be paid for via the reserve.
How to make the decision
The owners’ meeting decides on every expenditure from the reserve. The administrator submits an offer or a cost calculation for this purpose, which is then voted on. Funds may only be released with this resolution.
This ensures transparency – and protects all owners from uncontrolled use of funds. So if you know exactly what the money is being used for, you avoid disputes and subsequent queries.
Important: Reserves may not be used for private conversions within an individual apartment. Anyone who has special requests must bear the costs themselves.
Tax and organizational information
Only when reserves are actually used do tax-deductible income-related expenses arise (for rented apartments). Mere saving does not yet count as an expense.
This is why good planning is crucial: reserves should be checked regularly and adjusted to the condition of the building. Active property management ensures that no measures are overlooked or delayed.
Maintenance reserves and selling the condominium – what you should look out for
The maintenance reserve plays a greater role in the sale of a property than many owners initially think. It is a silent factor that significantly influences the value and attractiveness of a property.
Reserves – a signal for buyers
A well-filled reserve account signals stability. It shows that the community of owners is managing with foresight and that future repairs are financially secure.
Buyers see this positively – it creates trust and makes price negotiations easier.
The situation is different if the reserve is low or special levies are imminent. This raises doubts. Many prospective buyers then calculate more cautiously or demand a discount, which is why it is important to check the current level of reserves and whether major measures have already been decided before selling.
A short excerpt from the last business plan or the annual statement of accounts can be a valuable argumentation aid here.
What happens to the maintenance reserve when the property is sold?
From a legal perspective, the reserve remains the property of the community of condominium owners (WEG).
This means that it is not transferred directly to the buyer when the property is sold, even if the buyer participates in the ongoing reserve payments in the future.
The amounts paid in to date are “used up” in a certain sense, as they serve the common assets.
Nevertheless, the existing reserves influence the purchase price – indirectly. A solidly financed community means less risk and often a higher market value.
Tip: Seek advice from an experienced real estate agent before selling. VIAREALIS® evaluates your condominium not only according to its location and furnishings, but also according to the financial situation of the community.
Condominiums as part of retirement provision
Those who keep their condominium for the long term benefit twice: through an increase in value and through the protection provided by stable reserves.
They not only protect the building, but indirectly also the invested assets – an important aspect for anyone who uses their apartment as a capital investment or retirement provision.
You can find out more in the article
“Condominium as a retirement provision”.
Reserves in the community of owners – organization & responsibility
The formation and management of the reserve is the responsibility of the homeowners’ association (WEG).
All apartment and building owners are responsible, the administrator takes care of bookkeeping and account management.
The owners’ meeting decides on payments and their use. This is where figures are disclosed, measures are discussed and resolutions are passed – transparency is mandatory.
Good organization is evident in everyday life: clear protocols, regular reports, open communication.
If this is missing, misunderstandings quickly arise – usually when money for repairs is suddenly missing.
Maintenance reserve and new buildings – differences to old buildings
With new builds, the reserve is usually low at the beginning. No wonder – the first few years often pass without any major repairs. Many communities therefore start with a symbolic contribution, which is later increased step by step. But here too, it pays to make provisions early on. After just a few years, minor maintenance, initial inspections or modernizations are due.
The situation is different for older buildings, such as existing properties in Dresden. Here, the amount of the maintenance reserve is crucial – especially if the building is more than 15 to 20 years old. The roof, façade, technology and pipes need to be checked regularly and in some cases replaced.
Anyone deciding between a new build and an existing apartment in Dresden should also keep an eye on long-term reserve planning.
Read more in the article “New build or existing property – condominiums in Dresden as a secure investment”.
In both cases, a realistic calculation of reserves is part of any sustainable real estate strategy – whether for owner-occupiers or investors.
3 common mistakes when building up reserves
1. insufficient reserve
Many owners calculate too tightly. This works for a while – until the first major renovation is due. Then it gets expensive, usually in the form of an unpleasant special levy.
2. lack of adaptation
A common classic: the reserve remains the same for years, even though construction costs and energy prices rise. A regular adjustment is necessary, otherwise the reserve loses its purpose.
3. no transparency in the administration
If it remains unclear how much money is available or what it is being used for, mistrust and conflicts arise. Good property management ensures openness here – and trust in the community.
Conclusion – maintenance reserves ensure long-term value retention
Solid reserve planning is not a bureaucratic act, but the basis for maintaining the value of every condominium. It protects against financial bottlenecks, strengthens cohesion in the community and makes your property more attractive in the long term – whether for owner-occupiers or investors.
VIAREALIS® supports owners in Dresden in correctly assessing maintenance reserves, realistically evaluating the condition of buildings and developing sustainable strategies for value appreciation and quality of life.
A good reserve is not a luxury. It is foresight – and the foundation on which every home stands securely.
Take the first step now
The perfect moment to combine your tax strategy with the right property.