How the cost of managing the building's owners' association is calculated
The management fee is not a magic constant. It consists of several clearly definable components, and with a fair manager you should see this breakdown in black and white before signing the contract.
Basic maintenance according to §1189 of the Civil Code includes accounting, convening meetings, liaising with authorities, managing common property and maintaining the owners' register. This is roughly 150-250 Kč/apartment/month for an average rental building in Prague 1-3.
Extended management with servicing - namely an emergency hotline available 24/7, regular technical inspections, coordination of inspections and active management of the repair fund - is priced at 300-450 Kč/apartment/month. This is neither an error nor an inflated margin; it is a fair price to ensure the chairman's phone does not ring at midnight.
In historic buildings within protected heritage zones (Josefov, Old Town, Lesser Town), the price usually moves towards the upper limit because the manager must additionally communicate with the relevant authorities. NPÚ and professional designers.
Model calculation: rental building, 20 flats, Prague 1
Let us illustrate this with a specific example that we at Heritum see almost every week. We have a tenement building from the turn of the 19th and 20th centuries in Josefov, comprising 20 residential units with an average area of 65 m².
Calculation of the property manager's monthly fee at a rate of 350 Kč per flat:
- 20 flats × 350 Kč = 7 000 Kč/month
- Annually: 84 000 Kč excluding VAT
What is included in these 7 000 Kč:
- Double-entry bookkeeping for the building's owners' association and annual final accounts (equivalent to approximately 1 800 Kč/month).
- Payment terms, reminders, service allocation (~1 200 Kč)
- Organisation of the meeting, including minutes and notarisation of amendments to the articles of association (~900 Kč)
- Emergency line 24/7 with guaranteed dispatch within 2 hours (~1,500 Kč)
- Dealing with authorities, insurance companies and energy suppliers (~800 Kč)
- Regular technical inspection twice a year and coordination of inspections (~800 Kč)
If anyone offers you the same scope of services for 150 Kč per flat, they are either cutting costs (usually on the emergency line and technical management) or planning to significantly raise the price after a year.
What specifically affects the cost of maintenance
1. Age and technical condition of the building
A new build from 2020 means low management costs of around 200 Kč per flat. A tenement from 1880 with original distribution systems, wooden windows and cast-iron pipework? Easily double that. An old building simply generates more emergencies, more inspections and more communication with the owners.
2. House size and number of owners
A building with fifty flats spreads fixed costs over more units - the price per flat can easily drop to 150-200 Kč. Conversely, a small building with six flats costs more per flat because accounting and meetings take up similar time as in a large building.
3. Technical equipment
Private gas boiler room, lift, underground garage, ventilation, every piece of equipment requires regular servicing, inspection and coordination of repairs. A building with a lift and boiler room is 50-100 Kč per flat more expensive than one without them.
4. Location and heritage protection
In Prague 1, maintenance is more expensive than on the city's outskirts. The reason is not snobbery but real costs, dealing with NPÚ, the Prague 1 Building Authority, heritage officers and greater reconstruction complexity.
5. Scope of agreed services
Do you want just the mandatory minimum, or also active management, reporting, regular inspections and communication with owners? Every extra service costs money, but it usually pays for itself through savings from prevention.
Why extremely cheap facility managers are risky
You will find offers on the market ranging from 130 to 180 Kč per apartment. It looks attractive. You could save 100 thousand crowns annually in a fifty-apartment building. The problem is that a complete service cannot be provided at this price.
Where savings are typically made:
- Emergency line. Either it doesn't exist, or no one will answer the phone on Sunday night. A burst riser then waits until Monday morning, and the damage is ten times greater.
- Technical management. The property manager only handles accounting and does not visit the building in person. Minor faults escalate into emergencies.
- Quality accounting. A cheap property manager often handles dozens of owners' associations at once, and errors in service cost allocation or missed deadlines with the tax authority will sooner or later come to light.
- Negotiations with owners. The assistant answers the phone; the chairman of the building's owners' association has no reporting available and only learns about the condition of the building at the annual meeting.
For several owners' associations in Prague 1 that transferred to us from a low-cost manager, we spent the first six months primarily tracking down incomplete accounting and addressing long-neglected inspections. The savings from previous years returned in the form of double costs for consolidation.
How to recognise a fair tariff
A fair manager will show you the offer. breakdown of price by itemnot a single flat fee. Ask specifically:
- Is a 24/7 emergency line included in the price, and what is the guaranteed response time?
- How many times a year is the technical inspection of the building carried out?
- Who and how often prepares the service allocation statement?
- Is the organisation of the meeting including the minutes included in the price, or is it charged separately?
- What is the reporting schedule for the building's owners' association board: monthly, quarterly, or none?
- How is the price adjusted? A fixed rate for 3 years, or an annual increase based on inflation?
If the building manager evades any question or replies that "everything is included in the price", it is a red flag. A competent manager will have a calculator and explain why the cost is exactly that amount.
Price versus value: what to actually look for
A difference of 100 Kč per flat per month amounts to 24,000 Kč annually in a twenty-flat building. A single neglected emergency caused by the slow response of a cheap manager can easily cost 150 thousand korunas, and that is without mentioning the chairman of the building's owners' association losing their nerve or flooded flats.
At Heritum, our projects for building owners' associations cost on average 350-420 Kč/flat/month including an emergency hotline, regular inspections and a proprietary approach, meaning we know who lives in the building, what the board's preferences are and which repairs are due. For a thirty-flat rental block this means an annual management fee of approximately 126-151 thousand Kč, which is a very reasonable item in the context of the building's total annual budget (usually 1.5-3 million Kč).
Treat the management fee as an investment in peace of mind and the building's future value. A well-managed rental property in Prague 1 maintains its price per square metre, and this pays off when flats are sold years later.
Frequently Asked Questions
Can the management fee be agreed individually?
Yes. The price is always agreed within the property management service contract and depends on the specific scope of services. For atypical buildings (monuments, large-scale technology), an individual quotation is standard.
What if the property manager raises the price during the year?
The administrator is obliged to convene a meeting and justify the increase. The price cannot be unilaterally raised without the meeting's consent, unless the contract stipulates otherwise, for example through an indexation clause linked to inflation.
What is the difference between our price and that of cheap managers?
Cheap property managers (130-180 Kč) usually offer only minimal management without an emergency line, without regular inspections, and with one accountant handling dozens of the building's owners' associations. We operate as a boutique, managing fewer buildings, maintaining personal relationships with committees, and guaranteeing response times.