Housing company finances: do you know where your charge goes?

The maintenance charge leaves your account every month, but many shareholders have never looked into where the money goes. All it takes is knowing what generates the housing company’s expenses, which documents are worth reading and what you can ask.

In most housing companies, things are in good order. Board members look after shared affairs in their free time, and property managers and maintenance companies do demanding work. Even so, the finances are every shareholder’s business, because maintenance, insurance, repairs, heating, cleaning and property management are paid for mainly out of shareholders’ charges. Asking questions is a normal part of being an owner, not a sign of distrust.

The documents show where the money goes

There are plenty of opinions on the level of the maintenance charge, but the documents show how things actually stand:

• The financial statements show how much money has been spent and on what.
• The annual report describes what was done during the year. Under the Limited Liability Housing Companies Act, it must also give information on how the budget was implemented and explain any significant deviations.
• The budget shows what the money is going to be spent on next year.
• The maintenance needs report gives the board’s assessment of significant repairs over the next five years.

The financial statements, annual report and maintenance needs report are presented at the annual general meeting, which must be held within six months of the end of the financial year. Read together, they show how the finances have developed and which way they are heading. More about the documents in the article on housing company documents.

Small differences add up

Imagine that, thanks to better competitive tendering, planned maintenance or fixing recurring faults, the company’s expenses were €30 a month lower per apartment. That is €360 a year, and €3,600 per apartment over ten years. If the housing company has 40 apartments, the difference over ten years is €144,000.

The example is hypothetical, and it does not mean that your housing company is paying too much. It shows how even small monthly differences multiply.

What generates the expenses

A budget contains dozens of expense items. Typical ones are heating, electricity and water, property maintenance, cleaning and waste management, insurance, property management and accounting, yard upkeep, servicing of lifts and ventilation, fire safety and repairs. If the company has loans, interest and repayments come on top.

All of these are necessary, but it is always fair to ask whether something could be done better. The best solution is not necessarily the cheapest, but the one that strikes a balance between price, quality, service and long-term impact.

Contracts. The same maintenance company may have looked after the property for years. There is nothing wrong with that, but prices, services and the company’s needs change. Competitive tendering lets the company find out where the market stands, and when choosing, it is worth considering quality, response times and the scope of the service as well as price. Tendering for a maintenance contract is covered in the article on choosing a maintenance company.

Insurance. Find out when the insurance was last put out to tender, whether the cover is sufficient and whether the excesses suit the company’s situation.

Energy. Heating and electricity are among the largest expense items in many housing companies. Adjusting the heating and ventilation, upgrading the lighting and monitoring consumption each seem like small things, but the effect builds up over the years.

Maintenance. A small water leak can turn into extensive moisture damage, and equipment that is not serviced often breaks down just when it is needed most. Preventive maintenance means taking action at the right time, not carrying out unnecessary renovations.

Questions a shareholder can ask

When the financial statements are dealt with at the general meeting, the board and the property manager must, at a shareholder’s request, also give information on the company’s financial position. You could ask, for example:

• When were the key contracts last put out to tender, and on what basis was the supplier chosen?
• Which cost item has grown the most, and why?
• Why is this repair being done now? Is it about safety, protecting the structure or controlling costs?
• What happens if the repair is postponed?

Sometimes postponing is justified; sometimes it increases future costs. The most important thing is that the reasoning behind decisions is understood.

Once a year is enough

Following your housing company’s finances does not require a degree in financial management. It is enough to spend a little time on the documents once a year:

1. Read the financial statements. Simply comparing costs with previous years raises useful questions.
2. Look through the budget. If an item increases significantly, find out why. There is often a good reason, such as a rise in energy prices or an upcoming repair.
3. Read the maintenance needs report. Knowing about upcoming repairs early gives you time to prepare for them.
4. Attend the general meeting. That is where the financial statements are adopted, the budget and charges are decided and the board is elected.

If your charge has gone up, the reasons are explained in the article on why the maintenance charge increases.

Frequently asked questions

Does a shareholder have the right to information about the housing company’s finances?

Yes. The financial statements, annual report and the board’s proposals must be made available for shareholders to inspect at least two weeks before the general meeting, and they must be sent to a shareholder on request. At the meeting, the board and the property manager must, at a shareholder’s request, give more detailed information on the matters being dealt with and, in connection with the financial statements, on the company’s financial position. In addition, a shareholder has the right to receive without delay a copy of any document held by the company concerning their apartment that is relevant, for example, to assessing costs.

Which documents are worth reading?

At least the financial statements, the annual report, the budget, the maintenance needs report and the minutes of the general meeting.

This article provides general information and does not replace case-specific legal or technical advice.