What are the 'management fees' (kanrihi) and 'repair reserve funds' (shūzen tsumitatekin) paid monthly after purchasing an apartment? How are they used?
Hello! Congratulations on considering buying an apartment in Japan—it's a big decision. The "Management Fee" and "Reserve Fund for Repairs" you asked about are indeed essential things every apartment buyer must understand. I'll explain them in plain language to help you out.
Simply put, these two fees are like two types of expenses needed to maintain a "home": one for daily costs, and the other for savings set aside for the future.
1. Management Fee (管理費 - Kanrihi) - The Apartment's "Daily Expenses"
You can think of the Management Fee as the "daily operating budget" or "living expenses" for the entire apartment building. When you move in, you naturally want the building to be clean, safe, and functioning properly, right? The management fee is what maintains that state.
It's primarily used for:
- Cleaning common areas: Such as lobbies, hallways, staircases, and garbage collection areas.
- Utilities for common areas: Like lighting in hallways, air conditioning/heating in lobbies, electricity for water features, etc.
- Equipment maintenance: Regular inspections and servicing of elevators, fire safety equipment checks, pump operation, etc. These are legally required.
- Building manager's salary: If your building has a resident manager (管理人さん - Kanrinin-san), their salary comes from this fund. They handle minor daily issues, receive packages, etc.
- Landscaping: Maintenance of plants and trees around the apartment complex.
- Management company fees: Professional property management companies (管理会社 - Kanri-gaisha) handle all the above tasks and charge a service fee.
- Other miscellaneous costs: Small expenses like cleaning supplies or replacing light bulbs.
In a nutshell: The Management Fee ensures you have a comfortable, convenient, and safe environment "today" while you're living there. This money is spent on the "present" and the "near future."
2. Reserve Fund for Repairs (修繕積立金 - Shūzen Tsumitatekin) - The Apartment's "Pension" and "Emergency Fund"
If the Management Fee is for daily expenses, then the Reserve Fund for Repairs is the building's "long-term savings account" or "pension fund." Like people, buildings "age" and "get sick" over time, needing "major surgery." This fund is money saved in advance for those future, expensive repair projects.
Think about it: after 10 or 20 years, a building will inevitably face major issues. For example:
- Re-painting exterior walls or repairing tiles: Not just for looks, but to protect the structure.
- Roof waterproofing: If this fails, top-floor residents suffer; it must be done periodically.
- Replacing major water pipes or gas lines: These are hidden in walls; failure due to aging causes big problems.
- Complete elevator replacement: Elevators need full replacement after decades—a huge expense.
- Renovating parking lots or common hallway flooring.
These projects easily cost millions or even tens of millions of yen. Trying to collect this money from all owners after a problem occurs would be a disaster. Some might not be able to pay, halting the project.
Therefore, Japanese apartments require all owners, from the day they buy, to pay a monthly amount into a collective account. This builds up over time into a "repair fund." The fund is managed by the "Owners' Association" (管理組合 - Kanri Kumiai), which creates a Long-Term Repair Plan (長期修繕計画 - Chōki Shūzen Keikaku). This plan outlines major projects needed over the next ~30 years, estimating costs and timing.
In a nutshell: The Reserve Fund for Repairs ensures your building maintains its value and safety 10, 20, or even more years into the future, giving you peace of mind. This money is saved for the "future."
Summary Comparison
| Item | Management Fee (Daily Expenses) | Reserve Fund for Repairs (Long-Term Savings) |
|---|---|---|
| Simple Analogy | The building's "living expenses" | The building's "pension fund" / "piggy bank" |
| Purpose | Maintain daily cleanliness, safety, convenience | Prepare for future large-scale repairs |
| Timeframe | Short-term, spent monthly | Long-term, saved for future use |
| Specific Uses | Cleaning, security, elevator maintenance, common area utilities | Large-scale replacement/repair of exterior walls, roofs, pipes, elevators |
Key Points to Note When Buying
- Both fees are mandatory. As an owner, you must pay them. Payment history for both is a major concern for buyers when you sell.
- The Reserve Fund usually increases! Many new buildings set the initial reserve fund contribution low to attract buyers. But as the building ages and repair needs grow, this fee almost always increases in stages according to the Long-Term Repair Plan. Always ask about future increase plans when buying.
- Beware of unusually low Reserve Funds. If you find a resale apartment with a suspiciously cheap reserve fund, don't celebrate too soon. This likely means their "savings" are severely inadequate. It often leads to a situation where all owners must pay a large lump sum (called a "一時金 - Ichijikin") soon to cover the shortfall—potentially hundreds of thousands or millions of yen.
I hope this explanation clarifies things. Simply put, the Management Fee pays for comfort "today," while the Reserve Fund for Repairs ensures peace of mind "tomorrow." Both are essential responsibilities and costs you bear as an apartment owner to protect the value of your asset.