Hi,
Evaluating the costs involved in owning an apartment/house I always hear a good estimate for the maintenance costs is ~1% of the value per year.
I’m wondering now if this is really accurate, or if a better estimate should depend more on the size/type of the apartment rather than it’s value. For example, why a 1M apartment in Zurich should have double maintenance costs of similar 400/500k apartment in a more remote area?
Am I missing something?
Thanks!
I personally calculate in general with 0.7% p.a.
But it really depends on the standard of the property (e.g. Minergie, solar panels, insulation, etc.). Then, also a 5.5 room apartment can have lower costs than a 2.5 room apartment in an old building.
Some of the variable that can influence it
I found that study which could help you:
Microsoft Word - MT_CUREM_Doku_asc_definitiv.doc (uzh.ch)
You got some numbers of CHF/m2/a which for me, makes much more sense and eliminates the “land cost”.
I think that it also depends what you understand under maintenance : just repairing broken stuff or also upgrading to new standards (e.g. upgrading stuff from was standard 20y ago to todays standard like insulation, heating device new windows etc.). Just reparing would be around 1%, maybe slightly less, upgrades could go to 2% if you believe into Gerd Kommer.
Every single property is different and if you are worried about the cost it makes sense to try and estimate a more accurate number
I am not sure if this is the direction your mind is going but people who have never owned a property commonly ask “how can maintenance cost 10k/ year?” Real estate is often an emotional purchase and there is a tendency to turn a blind eye to the costs
Remember that roof, heating systems, etc need to be replaced eventually. Then there are discretionary items like replacing your kitchen, buying nicer furniture…
I think banks estimate an average based on long term experience and keeping some buffer. I never saw the standard deviation for this estimate.
For new apartments, initial years have less costs because everything is new. But as time goes on, things need to be re-done, replaced, fixed. That’s why it’s important to put money aside for the time when it’s needed.
Another element that plays a role is that some owners like expensive stuff in the home. Now expensive stuff is also expensive to replace when the life time is over.
And last point it also depends on the mind set of the owner themselves. This you can observe with people who own cars. Some might not tolerate even a small scratch and some don’t care about a dent. So what you are able to live with / or the tenant also drives what costs are incurred.
For example, I stayed in apartment for 7 years, I never saw a person doing any maintenance inside my apartment. They might have done something for the building but not in the apartment itself. Does it mean the cost was zero? No, because when I moved out, they did lot of work.
P.S -: costs of doing everything in Zurich is higher than remote areas. It might not be double, but maintenance and upkeep have two variables -: cost of materials and cost of Labor. Materials might not have a lot of difference but Labor will definitely cost more in Zurich.
Thank you all very much for your answers, they are very helpful.
Actually my mind was going in the opposite direction 
in particular, I was wondering if it is fair to apply the same 1% rate to a 1.5M 2.5 apartment in Zürich or to a 1.5M 200m2 house in a remote area. My case would probably be in the middle, but still it would be nice to have a more precise overview.
That is a very good point I didn’t think of.
Thank you all again for all your inputs, if I didn’t reply to something it is because I had nothing to comment, but it is appreciated
I view it as value sustainment cost: different parts of the house have different life expectancy. 1% means the weighted average would be 100 years, which is optimistic (we count 80-100 years for concrete, 15-25 for electric suff, etc.)
The cost of the land should be deducted for such calculation, but the weighed average would land higher than 1%. 1% is probably the statitical average that banks get when including the value of the land also.
The cost of labor will vary from region to region though that should factor too in the value of the (depreciating) property without the land.
Yes 1% is reasonable.