Service charges: the line item that drains your yield

When you compute the yield of an apartment, you factor in rent, purchase price and the loan instalment. But the line item that quietly slips through the cracks is the building service charges. On a 70 m² 3-room flat outside Paris, they typically range between 1,500 € and 3,000 € per year.

This expense splits into two distinct categories: recoverable charges (which you bill back to your tenant via the lease) and non-recoverable charges (which stay on your owner account). Confusing the two is the classic mistake that inflates expected cash flow.

On net yield, the impact lands quickly at 1 or 2 percentage points. For a 200,000 € investment with 9,600 € of annual rent, factoring in 1,200 € of non-recoverable charges drops net yield from 4.8 % to 4.2 %. Not trivial, especially over 25 years of holding.

The decree of August 26, 1987 sets the closed list of recoverable charges: maintenance of common areas, common cold-water consumption, common-area electricity, central boiler maintenance contracts, and lift use (routine maintenance and electricity, not major repairs).

Everything else stays on you: major maintenance, syndic fees, caretaker salary (with partial pass-through), building insurance, facade renovation, ALUR works fund. In a typical condo, the split runs around 50/50 between recoverable and non-recoverable.

Concretely, on 2,400 € of total annual charges, around 1,200 € is billed back to the tenant via the annual reconciliation, and 1,200 € remains your own cost. It is that second half you must include in your net yield calculation, not the total.

The lift is the priciest fixture: it adds 200 to 400 € per lot per year between mandatory maintenance and operating electricity. Add to that the major repairs (cabin, motor) that come through capital calls every 10 to 15 years, for 50,000 to 200,000 € depending on building size.

The caretaker is the other line item that blows up the bill. In a Parisian or Bordeaux upscale condo, the loaded salary can reach 30 to 50 € per m² per year. On a 70 m² 3-room flat that is 2,100 to 3,500 € for that single line, and the owner share usually exceeds 70 %.

Central gas or oil heating has surged since 2022. It has doubled or even tripled in some condos. And you have no individual lever to cut your consumption, unlike individual heating. Before buying, always ask the type of heating and the energy provision calls of the past two years.

First reflex: demand the minutes of the last 3 general assemblies. You will see works votes, provision increases, ongoing disputes and the overall health of the condo. A condo with facade renovation voted at 80,000 € last month does not trade at the same price as a healthy neighbour.

The full état daté and the maintenance log give you last year's charges and the per-lot allocation, that is your exact share. Compare with neighbourhood listings: if the property charges are 30 % above the average, there is a reason.

Also check the works fund, mandatory since 2017 (introduced by the 2014 ALUR law), at minimum 5 % of the budget per year. If it is low or absent, that is a bad sign: future major works will come through extraordinary capital calls, sometimes 5,000 to 20,000 € over a few months.

Property bought 220,000 € in Lyon, 65 m² 3-room flat let at 950 € per month (11,400 € annual). Total condo charges 2,800 € per year, of which around 1,600 € recoverable (water, lift, common areas) and 1,200 € non-recoverable (syndic, works fund, provisioned facade renovation).

Net yield ignoring charges (the classic mistake): \frac{11\,400}{220\,000} \times 100 = 5.18\%. Net yield including the 1,200 € non-recoverable: \frac{11\,400 - 1\,200}{220\,000} \times 100 = 4.64\%. Half a point lower, but already more realistic.

If you also factor in property tax (1,100 €), landlord insurance (180 €) and maintenance provisions (300 €), real net yield drops to 3.9 %. You see the gap: a buyer relying on gross 5.18 % is misjudging real yield by a quarter.

First lever: avoid heavy-amenity condos when yield is tight. On a 6 % yield investment in a mid-tier city, lift or caretaker can pull you down to 4 %. Reserve such buildings for capital-gain plays where price appreciation compensates.

Second lever: negotiate the purchase price down if charges run above the neighbourhood average. A condo at 35 € per m² per year of total charges versus 22 € per m² per year on average justifies a 5 to 10 % price discount. A concrete, numerical argument that serious buyers actually use.

Buy&Rent factors building service charges into the net yield calculation from the simulation onwards. You enter the total amount and the recoverable share, the app computes the real impact on cash flow and yield. No more nasty surprises after signing.