Reserve fund co-ownership and renting
Reserve fund co-ownership and renting
Legal framework of the reserve fund
Since the co-ownership reform of 1 January 2019, the reserve fund is mandatory in all Belgian co-ownerships.
Legal obligation
| Element | Detail |
|---|---|
| Legal basis | Civil Code, Book 3, Title 3 |
| Effective date | 1 January 2019 |
| Minimum contribution | 5% of ordinary common charges |
| Bank account | Separate from the working capital fund |
| Management | By the building manager |
Purpose
The reserve fund is intended to finance major repairs and exceptional works: roof renovation, lift replacement, facade rendering, compliance upgrades.
For the general framework, see our guide on co-ownership and renting.
How the reserve fund works
Funding
The fund is fed by annual contributions from co-owners, proportionate to their shares. The legal minimum is 5% of common charges, but the general assembly may vote a higher amount.
Use
| Permitted expenditure | Not permitted |
|---|---|
| Roof replacement | Current maintenance |
| Lift replacement | Common area cleaning |
| Facade renovation | Common area electricity |
| Fire compliance upgrade | Building manager fees |
| Collective boiler replacement | Management costs |
Investment
The general assembly decides on the investment of the reserve fund (savings account, secure investment). The building manager may not invest it on their own initiative in risky products.
The reserve fund must be held in a bank account separate from the working capital fund. This separation is mandatory and the building manager must account for it at each general assembly.
Impact on the rental
For the landlord
The reserve fund is a non-recoverable charge. It reduces the net yield of the rental property but protects against unexpected exceptional levies.
| Scenario | Without reserve fund | With reserve fund |
|---|---|---|
| Roof to replace (50,000 EUR) | Exceptional levy | Financed by the fund |
| Lift breakdown | Urgent levy | Financed by the fund |
| Facade to renovate | Levy | Financed (in part) by the fund |
| Cash flow impact | Large unforeseen expense | Smoothed over time |
For the tenant
The tenant does not pay the reserve fund. However, the tenant indirectly benefits from a better-maintained building. Recoverable charges must never include the reserve fund contribution.
Yield impact calculation
For a unit with 200 EUR/month in common charges, the reserve fund contribution represents at least 120 EUR/year (5% of 2,400 EUR). This amount is not deductible from rental income.
Practical advice
For the landlord
- Check that your co-ownership complies with the legal obligation
- Include the reserve fund contribution in your yield calculation
- Never recharge this cost to the tenant
- Attend GAs to vote on the amount and use
Before buying to let
- Ask for the existing reserve fund amount
- Check planned works for the coming years
- Assess potential special levies
- Include these costs in your investment simulation
Formalise your charges in the lease and track them with a rental management software.