Economic plan WEG: Create financial plan [2025]

As a member of a condominium owners' association (WEG), you are part of a community that is jointly responsible for maintaining and increasing the value of a property. A central component of this joint task is the economic plan. In this article, you will find out what you need to know about the economic plan.

The business plan: The financial foundation of your WEG

The business plan is nothing other than your financial compass for the coming financial year. It represents a detailed forecast of all expected income and expenditure of the community. The main purpose of the business plan is to maintain and increase the value of your property. Careful planning of expenditure for maintenance, repairs and modernization ensures that your property retains its value and ideally even increases in value.

In addition, the business plan serves as an indicator of the community's financial situation and is an important basis for decision-making for both existing and potential owners.

Through forward-looking planning, the business plan helps to minimize risk and protects the owners from losses in value that could result from financial bottlenecks or insolvency of the condominium. The functions of the business plan are

• Financial forecast: The business plan forecasts the expected income and expenditure of the COA for the next financial year.
• Safeguarding liquidity: It ensures that sufficient funds are available for the management of the common property.
• Distribution of costs: The economic plan determines how much each owner must contribute to the community in the form of house fees.

Drawing up a business plan is mandatory

Does your community of owners need to have a business plan drawn up? The answer is clear: yes. The legal obligation to do so arises from Section 28 of the German Condominium Act(WEG Gesetz). The business plan is not only important for the financial stability of the community of owners, but is also required by law.

If there is no new business plan for a new financial year, the validity of the existing plan can generally be extended. This can be done either through an explicit agreement on a longer period of validity or through a so-called continued validity clause.

If there is no current business plan at all, the most recently adopted business plan remains valid until a new one is adopted. However, it is not legally permissible for an old plan to continue to apply indefinitely.

The business plan of your WEG - property management is responsible for drawing it up

As a member of your condominium owners' association, you are confronted with the business plan every year. But who actually draws up this important financial timetable? The main responsibility lies with your property management company:

• Legal obligation: The property management company is obliged by law to prepare the business plan.
• Professional expertise: Professional administrations have an overview of current costs and planned maintenance measures, empirical values from previous years and a network of service providers for current cost estimates.
• Collaboration: The property is often created in consultation with the management advisory board, a committee of owners that supports and monitors the property manager.
• Transparency is mandatory: The business plan must be clear and comprehensible so that you as the owner can understand the condominium's financial situation.
• Approval process: The completed business plan is presented to you for approval and must be accepted by the majority of the owners.

What you should look out for:

• Realistic planning: A good manager takes factors such as inflation and long-term investments into account.
• Balanced house fee: Is the house fee set too low? Then there is a risk of financing problems in the event of unexpected expenses. Is the house fee set too high? This could lead to resentment and mistrust within the homeowners' association .

Tip: A carefully prepared business plan is the foundation for a stable financial future for your condominium. Don't be afraid to ask questions at the owners' meeting and get actively involved in the process.

The business plan includes a list of all income and expenses

The business plan gives you an overview of all the planned income and expenditure of your condominium owners' association.

Income is all money that flows into the community of owners and that can reduce the owners' monthly payments. This includes, for example

• House allowance: The regular payments made by the owners.
• Rental income: If the community rents out parts of the common property.
• Other income: This includes, for example, proceeds from the sale of scrap metal or donations.

Expenses are all costs that the community of owners has to bear during the financial year. Typical costs are

• Management costs: Fees for the management of the WEG by a property management company.
• Maintenance: Costs for repairs, renovations and renewals of the common property.
• Operating costs: Expenses for heating, water, electricity, waste disposal, cleaning and garden maintenance.
• Insurances: Premiums for building and liability insurance.
• Reserves: Part of the income is set aside for larger purchases or unexpected costs.

The business plan therefore helps you owners to see transparently what your money is being used for and how the finances of the community of owners are developing.

The decision on the economic plan: A guide for your WEG

The business plan is adopted each year at the owners' meeting. To ensure that all owners are involved in this important decision-making process, the adoption of the business plan follows a clearly structured procedure:

Annual frequency and preparation: The business plan is usually drawn up once a year and adopted by the community. It is usually valid for one financial year. The administrator is responsible for drawing up the plan and informing the condominium owners about it in good time. To this end, all owners receive the business plan together with the invitation to the owners' meeting.

Announcement and transparency: To ensure that all condominium owners have the opportunity to familiarize themselves with the business plan and clarify their questions, it must be listed as a fixed agenda item in the invitation to the owners' meeting. Passing a resolution without prior notice is not permitted by law.

Procedure of the owners' meeting: During the meeting, the economic plan is usually presented by the property management or an authorized representative. All those present then have the opportunity to ask questions, express their opinion and, if necessary, make suggestions for changes. The final decision on the business plan is then taken by vote. This can be carried out in writing, verbally or digitally. As a rule, a simple majority of votes is sufficient to pass a resolution. However, deviating regulations may be stipulated in the declaration of division.

Binding nature and confirmation: Once the resolution has been successfully passed, the approved business plan is valid for the coming financial period. To confirm the validity of the resolution, it is usually signed by the management advisory board or the entire community.

The legal basis is the German Condominium Act (WEG)

The legal basis for the business plan of a condominium is the German Condominium Act. In particular, Section 28 (1) WEG obliges the management to prepare an annual business plan. This is the only way to fulfill the function of transparently controlling and planning the common finances.

Creation by the property management

WEG Section 28 (1) stipulates that the WEG management must prepare a business plan for each calendar year. According to Section 28 (2) WEG, a reconciliation between the actual costs and the economic plan is required at the end of the year. For this purpose, the management prepares a detailed annual statement that lists all actual income and expenses and is submitted to all condominium owners for review. On the basis of this statement, additional payments can be demanded or the advances for the coming financial year can be adjusted if necessary.

Review by the management advisory board

Pursuant to WEG Section 29 (2), the WEG is responsible for adopting the economic plan. In this context, the management advisory board is obliged to thoroughly review the documents prepared by the management - both the economic plan and the annual financial statements - and to comment on them.

The advisory board ensures that your interests as an owner are protected. It checks whether the economic plan is realistic and whether the costs are reasonable. It can also help you to better understand the complex relationships in the business plan. After this process, you as the owner can vote on the business plan at the owners' meeting.

This illustrates the close link between your condominium's business plan for the upcoming financial year and the annual accounts for the previous period. It is advisable for all co-owners to critically scrutinize and closely examine any significant deviations in the cost estimates - whether upwards or downwards - compared to the previous year.

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The individual business plan

In addition to the overall business plan for the entire community of owners, the property management prepares an individual business plan for each co-owner. This system enables the owners to have a clearer overview of their financial obligations. The individual business plan as part of the condominium management fulfills several purposes:

1. Monthly house allowance: The plan shows you as a homeowner exactly how much you have to pay each month in house fees.
2. Focus on communal property: Please note that the individual management plan relates exclusively to payments for the communal property. Costs for your private apartment or the management of the separate property are not included here.
3. Transparent distribution key: The plan reveals how the costs for the common property are distributed among the individual homeowners. This key is usually based on the co-ownership share (MEA), which is specified in the community regulations or declaration of division.

The individual business plan is therefore your personal financial compass within the condominium owners' association. It gives you clarity about your obligations and helps you to understand and plan your expenditure for the common property. The combination of overall and individual budgets in a condominium association serves to ensure a high degree of transparency and fairness in all financial matters.

Tip: If you want to estimate your monthly costs as a co-owner of a condominium, you can use a rule of thumb as a guide: The house fee is typically around 20 to 30 percent higher than the monthly ancillary costs of a comparable apartment. This difference is mainly due to additional expenses that are not incurred in rented apartments, such as property management and maintenance costs.

Please also note that you will have other financial obligations in addition to the house allowance. One significant item is the property tax, which is payable separately and is not included in either the house rent or the economic plan.

More tips? In this blog article, we answer the question of whether the house fee is apportionable.

Business plan vs. annual statement of accounts: the difference for condominium owners

Two key financial documents play an important role in your condominium owners' association: the business plan and the annual statement of accounts. Both are closely linked and together provide a comprehensive overview of the financial situation of your community. We would be happy to explain the difference between the economic plan and the annual statement of accounts:

The business plan: A look into the future

The business plan is essentially the budget of a condominium. It is usually drawn up at the beginning of each year and provides a forecast of the expected income and expenditure for the coming calendar year. The business plan serves as the basis for determining the monthly house allowance payments to be made by the owners.

• Purpose: Financial planning for the coming year.
• Time frame: Refers to the coming year.
• Content: Forecasted income (e.g. house payments) and expenses (e.g. maintenance costs, insurance).
• Preparation: By the administrator before the start of the planning period.
• Approval: Must be decided by the community in an owners' meeting.

The annual accounts: a look back

In contrast to the business plan, which looks to the future, the annual statement summarizes the actual financial transactions of the past year. It is a kind of "invoice" that lists the financial activities of the condominium in detail.

• Purpose: Documentation of actual financial activities.
• Time frame: Refers to the past financial year.
• Content: Actual income and expenses, as well as a comparison with the business plan.
• Preparation: After the end of the financial year by the administration.
• Significance: Enables a precise analysis of the financial situation and shows possible deviations between planning and reality.

The connection between the business plan and the annual financial statements

The business plan and the annual statement of accounts form a cycle. The findings from the annual accounts are incorporated into the preparation of the new business plan. In this way, possible errors or unforeseen events can be taken into account in order to create a more accurate forecast for the coming financial year. Both the business plan and the annual statement of accounts are essential for the stability of the condominium.

Challenges in preparing the business plan

Creating a business plan for your condominium can involve various hurdles. Here is an overview of possible problems:

• Delays are a frequent problem. Although there is no statutory deadline for submission, owners generally expect the business plan to be submitted on time, often in the first few months of the year. You may already know this from your own experience: delays can lead to resentment and disagreements between your COA and the property management company.
• Another difficulty lies in incomplete information. A lack of reliable data on past income and expenditure makes it difficult to plan realistically for the future. This is where experienced administrations like Ralph have the advantage, as we can fall back on comparative values.
• Unpredictable cost trends also pose a challenge. Fluctuating expenses for maintenance, repairs and operating costs make accurate forecasts difficult.
• A lack of transparency can undermine the condominium owners' trust in the property management company. A detailed breakdown of all costs and their use is therefore extremely important.
• Particularly in larger condominiums, differences of opinion about the necessity of certain expenses can delay the process of drawing up the business plan.
• The formation of reserves is another point of contention. Determining appropriate reserves for future measures can lead to conflicts.
• Unrealistic approaches to planning, whether too optimistic or too pessimistic, can result in financial difficulties.

Our tip: Digital solutions can help to overcome these challenges by speeding up processes and increasing transparency.

Careful, transparent and realistic planning is the key to avoiding these problems. A modern administration with experience and the latest technology can play a decisive role in this. Do you already know Ralph? Through close cooperation with the owners and open communication, we have already been able to overcome many challenges.

Errors in the business plan - what you can do

An incorrect business plan in your homeowners' association could have negative consequences. For example, inaccurate calculations of house payments can lead to financial bottlenecks, while insufficient reserves can result in unexpected special levies. These additional costs can overburden individual owners financially and become a burden.

In addition, an incorrect business plan harbors legal risks, especially if damage occurs due to incorrect calculations. Trust in the manager and the community can be permanently damaged by these errors.

To avoid such scenarios, it is important to draw up the business plan carefully and precisely. Regular reviews by the manager and transparent communication within the condominium can help to identify and rectify sources of error at an early stage. An accurate and reliable business plan is therefore the basis for smooth coexistence and cooperation in your condominium and creates financial security for everyone involved.

Do you already know Ralph?

At Ralph, we are more than just a property management company. Our experienced experts support you with a transparent business plan and many other issues that arise in your condominium. From organizing owners' meetings to enforcing resolutions - we are always at your side. Switch to Ralph now.

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