Renovation fund: a complete guide for Swiss condominiums (PPE)

• What is a renovation fund in a Swiss PPE?
• Which parts of the building are concerned?
• Renovation fund and legal requirements in Switzerland
• How much should be paid into the renovation fund each year?
• Concrete simulations by size of the PPE
• How are decisions about the fund taken?
• Renovation fund and taxation

In a condominium, the main issues rarely lie inside the individual apartments, but in the management of the common parts. The roof, façade, technical installations and lifts are all elements whose upkeep and renovation concern the entire PPE, often involving substantial amounts.

The question of the renovation fund usually arises when the first major works are planned. If such works have not been anticipated, the call for additional contributions can be heavy and become a source of tension or deadlock between co-owners. Conversely, a PPE that has built up sufficient reserves over time enjoys much more room for manoeuvre when it comes to deciding and acting. This reserve also facilitates obtaining or renewing a mortgage loan, as lenders see it as a sign of prudent management.

This guide explains how the renovation fund works, the legal framework under Swiss law and the contribution levels most commonly used in practice. It provides concrete benchmarks – including tax aspects – to help co-owners adapt their decisions to the reality of their building.

What is a renovation fund in a Swiss PPE?

The renovation fund is a financial reserve built up by all co-owners in a PPE. Its role is to provide funding, when the time comes, for major works affecting the common parts of the building.

The fund is financed through regular contributions from each co-owner, usually via the condominium charges, in proportion to their quota share. These amounts are paid into a separate account in the name of the condominium and may only be used for clearly defined works. The fund is therefore not intended to cover day-to-day maintenance, but to anticipate larger, long-term expenditure.

Amounts paid into the renovation fund form part of the collective assets of the PPE. They are attached to the unit and are transferred to the buyer in the event of a sale. The co-owner who sells their unit cannot recover the amounts paid in directly and must instead factor them into the sale price.

Which parts of the building are concerned?

The renovation fund is intended exclusively for the common parts of the building. It does not finance works carried out inside private units, but those that affect the condominium as a whole, regardless of how each co-owner uses these areas.

Common parts are generally those elements that ensure the structure, safety and proper functioning of the building. According to Article 712b paragraph 2 of the Swiss Civil Code, these include in particular: 

• the roof, façades and load-bearing walls
• technical installations (heating, ventilation, pipes)
• circulation areas (stairwells, entrance halls, corridors)
• lifts, boiler rooms, technical rooms and shared laundry rooms
• the parts of the ground that do not form a building

The boundary between common and private parts is not always clear-cut. A key role here is played by the administration and use regulations (RAU), often referred to as the “PPE regulations”. They may clarify the status of specific elements – such as balconies, terraces, gardens or windows – and define to what extent their maintenance or renovation falls to the community or to the individual co-owner.

Renovation fund and legal requirements in Switzerland

The same question regularly comes up at co-owners’ meetings or when buying a unit: is a renovation fund compulsory in a PPE?

Swiss law on condominium ownership, as set out in Articles 712a et seq. of the Civil Code, does not impose any explicit obligation to create a renovation fund. The law defines the principles of condominium ownership, the allocation of costs and the decision-making rules, but leaves co-owners broad discretion as to the financial organisation of their PPE.

In other words, from a strictly legal point of view, a condominium can operate without a renovation fund. This freedom explains why some PPE – in particular newer buildings – choose not to set one up immediately or to keep it at a low level during the first years.

However, the absence of a legal obligation does not mean that the renovation fund is optional. Over time it has established itself as a hallmark of sound management. Property managers, administrators and many owners’ associations recommend setting up such a fund from the early years of the condominium.

In practice, a PPE without a renovation fund is often perceived as more exposed to financial difficulties. Decisions relating to works may become more complicated in the absence of reserves, and co-owners may face substantial one-off contributions. This can also raise questions in the event of a sale, both for potential buyers and for lenders.

Why renovation funds are standard in practice

All buildings ultimately face similar renovation needs. Structural elements and technical installations have a limited lifespan, and the first major renovation works usually become necessary after twenty to thirty years.

Where a renovation fund has been set up in advance, these works can be tackled gradually and in a planned way. Co-owners already have a reserve, making it possible to plan interventions, compare bids and decide without immediate financial pressure. Discussions can then focus on the scope and quality of the works rather than on each person’s ability to pay.

Without a fund, the PPE is in a more delicate position. Some co-owners may struggle to keep up, which can lead to postponement of works or to decisions driven more by short-term financial constraints than by the long-term interests of the building.

A concrete advantage when selling

The state of the renovation fund is an aspect that potential buyers and lenders are paying increasing attention to. A well-funded reserve backed by a coherent maintenance plan is a strong signal of good management. It reassures buyers that no major unexpected expenses are likely in the short term and enhances the perceived value of the unit.

For the seller, a healthy renovation fund is a tangible argument in favour of a higher price. It can justify a better sale price and make negotiations easier, particularly when the building shows signs of ageing but has the necessary reserves to address them. It is also a point to factor into the overall assessment of purchase costs when buying a unit in a PPE.

How much should be paid into the renovation fund each year?

There is no single amount that applies to all PPE. The appropriate level of contributions depends closely on the characteristics of the building and the choices made by the co-owners. That said, certain ranges are commonly used as benchmarks and help structure the discussion.

In practice, many condominium associations fund their renovation reserve at a rate of 0.2% to 0.4% of the building’s insurance value (ECA value) per year. This range smooths the financial effort over time while gradually building a sufficient reserve for future works.

An annual contribution of around 0.2% is often cited as a sensible rule of thumb. It notably reflects the recommendations of the Swiss real estate professionals’ association. However, it is a guideline rather than a hard rule. Depending on the building’s situation, this level may need to be adjusted upwards or downwards. The contribution comes on top of other charges and must be taken into account when assessing each co-owner’s affordability.

Key factors that influence contribution levels

Several factors determine the appropriate contribution level to the renovation fund: 

• Age of the building: A recent building whose main components are still under warranty can start with more modest contributions. An older building must anticipate more imminent and more costly renovation works.
• Condition of technical installations: The presence of a lift, central heating, mechanical ventilation or other specific equipment increases the future need for renovation. Where major works have already been carried out (roof renovation, replacement of the heating system), this may justify a temporary adjustment of contributions.
• Size of the PPE: In a small condominium, each financial decision has a more visible impact on every co-owner, often calling for more cautious planning. In larger complexes, the burden can be spread across more units.
• Past decisions of the co-owners: A PPE that has long underfunded its renovation reserve may need to accept higher contributions for a period to catch up. A technical building survey, ideally combined with a CECB report (assessment of the thermal quality of the building envelope), provides an objective basis for setting contributions according to real, rather than approximate, needs.

What target amount should you aim for in the long term?

Beyond the annual contribution level, co-owners often think in terms of a target fund size. From a long-term management perspective, many Swiss PPE aim for a reserve equivalent to around 6% to 8% of the building’s insured value. This level is generally considered appropriate for the first major renovation works, which typically arise after twenty to thirty years.

To illustrate this: a PPE that contributes 0.3% of the insured value each year will reach 6% after twenty years and 9% after thirty years, which corresponds roughly to the period when the first large-scale renovation projects are needed.

Some condominiums also set a statutory ceiling, often somewhere between 5% and 10% of the insured value. This mechanism avoids over-capitalising the fund and allows contributions to be adjusted or even reduced once the reserve is considered sufficient. Regular reviews based on a multi-year maintenance plan help align the fund with the actual evolution of the building.

Concrete simulations by size of the PPE

The percentages mentioned above can feel somewhat abstract. The table below translates them into concrete amounts for three typical situations, assuming an annual contribution of 0.3% of the insured value. The amounts are provided for illustrative purposes only, before allocation according to each co-owner’s quota share.

Illustrative figures, equal distribution before allocation according to quota shares.

The table highlights a key point: whatever the size of the PPE, the individual effort remains broadly similar, provided that the insured value is proportional to the number of units. The difference lies in the condominium’s collective financial capacity. A PPE with 20 units will, after twenty years, have built up a reserve of CHF 600,000, enabling it to absorb major renovation projects more easily without needing to raise additional funds.

In a small PPE, the monthly amount per co-owner may seem significant. However, it allows reserves to be built up gradually, whereas a one-off call for funds to finance major works could otherwise amount to several tens of thousands of francs per unit.

How are decisions about the renovation fund taken?

Decisions relating to the renovation fund are taken collectively by the co-owners. They are voted at the general meeting (GM) of the PPE, which remains the key body for setting contribution levels and deciding how the accumulated reserves will be used.

In practice, the GM generally rules on the following aspects: 

• the principle and level of annual contributions
• the works to be financed and the planned timetable
• when the fund can be drawn on

The administrator prepares the items and advises the co-owners, but decisions are always made by a vote of the general meeting.

The creation of the renovation fund itself can be decided at the general meeting by simple majority, unless the administration and use regulations provide otherwise. Once the principle has been adopted, contributions become compulsory for all co-owners, including those who voted against. In the event of non-payment, the condominium may claim unpaid amounts and, if necessary, take legal action.

The majority required to use the fund depends on the nature of the works envisaged. The majorities indicated below correspond to common practice and may be adapted by the general meeting.

• Simple majority: for measures needed to maintain the value of the building (repair of the roof, replacement of a defective installation).
• Qualified majority: for works that bring a lasting improvement or added value.
• Unanimity: for comfort improvements or major alterations.

Having a renovation fund does not mean that all project costs must necessarily be covered by the existing reserve. Depending on the amount available and the scope of the works, the general meeting may decide to complement the fund with additional one-off contributions. The fund nevertheless helps reduce the extra effort required and spread the financial burden more fairly.

Renovation fund and taxation

Tax aspects are often overlooked when discussing the renovation fund, even though they have a direct impact on the real cost of contributions for each co-owner. The following points are key in the context of Swiss property taxation, in which imputed rental value plays a central role: 

• Income tax: payments into the renovation fund are not tax-deductible as such. The deduction can generally be claimed only when amounts are actually spent on maintenance work, provided that such work is aimed at preserving the value of the property rather than creating added value.
• Energy-efficient renovation: in most French-speaking cantons, energy-efficiency improvements enjoy more favourable tax treatment and may be deductible even when they improve the building’s performance.
• Wealth tax: each co-owner must declare their proportional share of the renovation fund as part of their taxable assets. This information is generally provided with the annual statement of condominium charges.
• Subsidies: energy-saving works (insulation, heating, solar panels) may be eligible for cantonal and federal subsidies. Applications must be submitted and approved before work begins.

It is strongly recommended to keep all supporting documents relating to contributions and works financed by the fund, so that they can be produced for the tax authorities if required.