Congratulations on becoming a homeowner! With the proud title of homeownership, however, also comes a range of financial responsibilities. This article gives you a comprehensive overview of the many facets of homeownership, from running costs to dealing with utilities, maintenance and renovations, to the role of the homeowner in the community and planning for the future. We hope it will help you approach the home ownership journey with confidence and enthusiasm.
Key takeaways
- As a new homeowner, you'll need to get to grips with various financial obligations, including property taxes and ongoing utility costs.
- It's important to take out comprehensive home insurance and carry out regular home inspections and maintenance to avoid major repairs.
- As a homeowner, you play an important role in your community and should maintain a positive relationship with your neighbors.
- Long-term planning and consideration are crucial, including adapting your home to future living arrangements and using your home as part of your retirement planning.
Table of content
What costs can I expect?
The costs you will incur as a property owner depend on whether you buy your own house or a condominium.
Running costs for homeowners
As a new homeowner, it is inevitable that you will face various financial obligations. These can be roughly divided into taxes and running costs for the property.
- Property tax: As a homeowner, property taxes will be a regular expense levied by local authorities based on the value of the land and the buildings on it. These taxes depend on the size and location of your property and must be included in your long-term financial planning. The property tax is calculated using the following formula: unit value × tax rate × assessment rate = property tax. Example: 100,000 euros x 0.35% x 400% = 1,400 euros per year. It is important to note that a property tax reform is planned for 2025 to modernize the outdated system and give the federal states more flexibility. You can find more details about the planned property tax reform here.
- Other costs: In addition to property tax, there are a number of other costs that should be considered. These include insurance (e.g. homeowners insurance), fees for garbage collection, water and sewage, as well as maintenance costs for the roof, facade and other elements of the house.
Ongoing costs as the owner of a condominium
As the owner of a condominium, you not only own your own apartment, but also a share of the common property.
- Your condominium: This is basically your own apartment – the place that you can design as you wish. You usually have to cover the following costs yourself
- Utilities
- Electricity
- Telephone / Internet
- If applicable, gas, provided that you have a gas heating system
- Insurance:
- Home contents insurance
- Renovations
- If something in your apartment breaks, such as a dripping tap or a wall that needs to be repainted, you are responsible for the cost.
- Common property: These are the areas of the building that you share with your neighbors - the so-called Wohnungseigentümergemeinschaft (WEG). Think of the staircase, the elevator or the garden. But also the load-bearing walls and ceilings, the roof, etc. The so-called apartment property manager (WEG administrator) is appointed by the community of owners and takes care of all matters. Each owner pays a so-called house allowance for the expenses incurred, as well as a maintenance reserve. The following costs are usually covered as part of the common property via the house allowance: A small tip: if you can, take part in the owners' meetings. Decisions are made there that could also affect your budget. And even if these meetings can sometimes seem a bit dry: it's always good to be informed and possibly to express your opinion. If unexpected costs arise for the common property, it is advisable to put a little money aside so as not to be surprised by additional costs.
- Supply:
- gas, oil, etc. - if it is a matter of central heating
- water
- electricity of the community facilities (e.g. stairwell)
- Insurance:
- homeowners insurance
- and, if applicable, liability insurance as a property owner
- Renovations and maintenance of the common property
Ways to budget and save
Whether you own a house or a condominium, it is essential to create a detailed monthly budget for your real estate expenses. This will help you to meet your financial obligations. This should include not only property taxes and utility costs, but also unforeseen expenses for repairs or maintenance. You can save on energy costs by considering whether energy-efficient renovations such as improved insulation or the use of LED lights and energy-efficient appliances would make sense for your property. These measures can significantly reduce energy consumption and thus lead to noticeable savings.
What insurance should I have as a new homeowner?
As a new homeowner, you are faced with many new challenges – one of which is taking out the right insurance. It's not just about protecting yourself and your belongings, but also avoiding unexpected financial burdens. Damage to the property or losses due to theft and natural disasters can quickly result in high costs. That's why it's essential to be well insured and to make sure that all relevant risks are covered. Especially if you live in a region that is prone to certain natural events, you should consider additional protection, such as flood insurance.
Here are the five most important types of insurance you should consider as a homeowner:
- Homeowners insurance: This insurance is often mandatory when you take out a mortgage. It covers damage to the building itself, e.g. from fire, storm, hail or water pipes.
- Home contents insurance: This protects your belongings from damage, e.g. due to theft, vandalism, fire or water damage.
- Natural hazard insurance: This is particularly important in regions prone to natural disasters such as flooding, earthquakes or avalanches.
- Homeowners and property owners' liability: This protects you from third-party claims if someone on your property is injured or their property is damaged.
- Additional protection: Depending on your needs and individual circumstances, you should consider taking out additional protection for photovoltaic systems, windows or oil tanks.
It's worth comparing offers from different insurance companies and seeking advice to ensure the best protection for your property and your individual needs.
What else should I look out for as a homeowner?
Once you become a proud homeowner, you are responsible for the regular inspection and maintenance of your home. This is crucial to ensure that everything is working properly and to avoid major repairs. Timely detection of potential problems can save a lot of money and hassle.
When and why inspections should be carried out
Regular inspections of your home are crucial to identifying potential problems early and preventing major damage. It is advisable to have the roof, pipes, electrical systems, and heating and cooling systems checked regularly. In particular, a thorough inspection of the roof should be carried out before the winter season to prevent damage caused by snow and ice.
Special features of condominiums
As the owner of a condominium, you are responsible for the regular inspection and maintenance of your property. In contrast, matters concerning the common property are usually regulated by the administrator of the condominium owners' association. It is important to actively participate in owners' meetings or at least to be informed in order to stay up to date on maintenance, repairs and other relevant decisions regarding common property.
Common maintenance tasks and their frequency
Some maintenance tasks should be carried out seasonally, such as cleaning the gutters in fall and spring. Other tasks, such as checking smoke detectors, should be done monthly. It is also advisable to have the heating system serviced annually to ensure it works efficiently and safely.
Common property vs. separate property
When it comes to communal things in the building, all apartment owners share the costs. But everything that only affects your own apartment is usually paid for by you alone.
What exactly is your “special property”? Quite simply: it is above all your apartment. You may also have a cellar room or a garage. But there are also things of which you only own a part because they belong to everyone. These include:
- the land on which the building stands
- important parts of the building that make it stable and secure, such as load-bearing walls
- things on the outside of the building, such as balcony railings
There are also things in the building that everyone can use. For example, think of the stairwell, the elevator or rooms that are there for everyone. The costs for these communal things are shared by all owners.
What is included in the common property?
The community, i.e. all apartment owners together, takes care of the things that belong to everyone. Often there is a property management company that takes care of this for everyone. For example, it ensures that tradespeople come when something needs to be repaired. As a rule, the common property includes:
- roof and facade
- corridors and elevators
- satellite systems and mailboxes
- load-bearing walls and caretaker rooms
- Staircases and windows
- Heating systems and insulation
- Balconies and many pipes in the building
What is considered a separate property?
You can do whatever you want with your own property, as long as you obey the law and do not violate the rights of others. This means that you can live in your apartment, rent it out or use it in any other way you choose. All of this is covered in the German Condominium Act (Wohnungseigentumsgesetz, WEG). In most cases, the following belong to the individually owned property:
- All rooms in your apartment
- Ceiling panels
- Floors and wall coverings
- Interior doors
- Interior walls that are not load-bearing
- Plumbing
What special cases are there?
There are special features in some components and areas that you have to take into account:
- Balconies: Your balcony belongs to you alone in parts, especially when it comes to the interior painting of the parapet, the mortar bed and the floor covering. However, the balcony ceiling, balcony exterior walls and parapet covering belong to all of you. In some cases, however, the balcony covering can also be considered your special property.
- Windows: In most cases, windows are considered common property. But sometimes, the apartment owners decide together that each person should renovate their own windows. But be careful: You are not allowed to change the external appearance of the building.
- Garden/terraces: Did you know that gardens and terraces cannot belong to you alone? But there is a cool option: you can register a special right of use for these areas in the land registry.
- Apartment doors: If you look at your apartment door from the inside, that's yours. So do you want to see it in a new color? No problem! But the outside area, what everyone in the stairwell sees, belongs to the community. So please don't do any wild color experiments there.
- Garages and parking spaces: Do you have a garage or a parking space in a parking garage? This can be your sole property if it is in the land registry. For outdoor parking spaces, this is not so easy, but here too you can secure a special right of use.
How can I, as a homeowner, increase the valuation of the property?
As a homeowner, you not only have the responsibility of maintaining your home, but you also have the opportunity to actively influence the value of your property. Long-term thinking and careful planning are key here. It's important to think about how future life circumstances might affect your home. Perhaps in a few years you will face the decision of using the house as part of your retirement plan or selling it. Therefore, it is advisable to regularly inform yourself about the real estate market in your area and consider possible value-enhancing measures.
Maintaining / increasing value
There are many ways you can increase the value of your home. One of the most effective methods is renovation. Whether you want to modernize your home, adapt it to current needs or simply beautify it, renovations can significantly increase the value of your property. It is important to plan and budget carefully. Determine exactly what work is needed, who will carry it out and how much it will cost. For extensive renovations, you should also check whether a building permit is required. With a clear plan and strategy, you can avoid unexpected costs and ensure that the renovation brings the desired increase in value.
In conclusion, it is important to remember that your home is not just a place to live, but also a significant financial investment. With the right preparation, proactive planning and a comprehensive understanding of the various aspects of home ownership, you can get the most out of your property and find both security and satisfaction in your home.
Conclusion
As a homeowner, you are on an exciting but also challenging journey. From financial decisions to home maintenance, there is always something new to discover and learn. But you are not alone – we are here for you!
We support you with valuable tips and the latest information, whether you are a long-time homeowner or a newcomer to the field. Our goal is to help you manage your property successfully and to your advantage.
Always remember: with the right knowledge, you can get the best out of your home and make it your personal place of comfort. Find out everything you need to know about being a homeowner and start your next home adventure with confidence. See you soon!
