Once a year it falls due: the service charge statement. For many property owners it is one of the trickiest duties of letting, because formal errors and missed deadlines can cost real money. Those who know the rules account calmly and on a sound legal footing. This guide sets out the most important points, so that you know what matters before the statement leaves the building.
What is the service charge statement and what is it based on?
Strictly speaking, tenancy law refers to the operating cost statement (Betriebskostenabrechnung). The term service charges has become established in everyday usage; it means the same thing: the annual statement covering the ongoing costs that a tenant bears in addition to the basic rent.
The legal basis is Section 556 of the German Civil Code (§ 556 BGB). Under this provision, you as the landlord may agree that the tenant bears the operating costs. Importantly, this apportionment must be expressly set out in the tenancy agreement. Without such an agreement, all operating costs are already covered by the basic rent and cannot be claimed afterwards.
What actually counts as operating costs is defined by the Operating Costs Ordinance (Betriebskostenverordnung, BetrKV), the German federal regulation listing recoverable operating costs. Its Section 2 contains an exhaustive list of the items that may be apportioned. Only what is named there, or specifically agreed in the contract as other operating costs, may be included in the statement.
Which costs are recoverable and which are not?
The distinction between recoverable and non-recoverable costs is the most common point of dispute. A clean separation protects you from objections.
Recoverable under Section 2 BetrKV are, among others:
- Ongoing public charges, in particular property tax (Grundsteuer)
- The costs of water supply and drainage
- Heating and hot water
- Operation of the lift
- Street cleaning and refuse collection
- Building cleaning, garden maintenance and lighting of the communal areas
- Chimney sweeping and the building's property and liability insurance
- The costs of the caretaker, in so far as these concern ongoing activities
Not recoverable, by contrast, are costs that belong to the owner's entrepreneurial risk. These include in particular:
- Administration costs, for example for property management, account keeping or postage
- Maintenance and repair, that is, repairs to the roof, to the heating system or the replacement of windows
- Financing costs such as loan interest, as well as depreciation
- Costs for vacancy, which you bear yourself as the owner
The line is often a fine one: the ongoing servicing of an installation is recoverable, whereas its repair is not. Those who draw a clean distinction here avoid most well-founded complaints.
Which apportionment key is the right one?
The total costs must be allocated among the individual tenancies according to a comprehensible measure. In practice, several keys are common:
- Living area in square metres, the standard for most consumption-independent costs
- Consumption, for example for water or heating, where meters are present
- Number of occupants, occasionally for refuse or water
- Residential units, less common and only sensible where the flats are comparable
If a key is agreed in the tenancy agreement, that key takes precedence. Where no agreement exists, the statutory fallback rule of Section 556a of the German Civil Code (§ 556a BGB) applies: in that case, costs are apportioned according to the share of living area. For consumption-dependent costs, a measure must be chosen that reflects the actual consumption.
A special rule applies to heating and hot water. The Heating Costs Ordinance (Heizkostenverordnung), the German federal regulation on the billing of heating and hot water costs, mandatorily prescribes a predominantly consumption-based statement: between 50 and 70 per cent of the costs must be allocated according to measured consumption, the remainder as base costs by area. A purely area-based heating cost statement is, apart from a few exceptions, impermissible.
The accounting deadline: the 12 months that count
Advance payments must be accounted for annually. The accounting period may cover at most twelve months; the calendar year is customary.
What is decisive is the deadline for receipt by the tenant: under Section 556(3) BGB, the statement must reach the tenant by the end of the twelfth month after the end of the accounting period at the latest. For example: for the accounting year 2025, which ends on 31 December 2025, the statement must be in the tenant's hands by 31 December 2026.
If you miss this deadline, it has a noticeable consequence: you are barred from any additional claim, provided you are responsible for the delay. Any credit due to the tenant, on the other hand, you must reimburse even where the statement is late. The deadline therefore operates one-sidedly to your disadvantage, which is why it is among the most important dates in a landlord's year.
What a proper statement must contain
A statement is only formally effective if it is comprehensible to the tenant without further explanation. The case law essentially requires the following minimum particulars:
- Identification of the rented property and of the contracting parties, as well as the clearly stated accounting period
- A compilation of the total costs by cost category, that is, the costs of the entire economic unit, not just your own share
- Statement and explanation of the apportionment key for each item
- The comprehensible calculation of the tenant's share, that is, the path from the total amount to the specific share
- The deduction of the advance payments actually made
- The stated balance, that is, an additional payment or a credit
If one of these particulars is missing, the statement may be formally ineffective, with the consequence that an additional claim is unenforceable. Care over form therefore pays off at least as much as accuracy with the figures.
The tenant's rights: objection and inspection of records
Just as a deadline applies to you, one also applies to the tenant: he must raise objections to the statement by the end of the twelfth month after receipt at the latest (Section 556(3) BGB). After that, objections are in principle excluded, unless the tenant is not responsible for the delay.
Until then, the tenant may inspect the supporting records, that is, the invoices, contracts and fee notices on which the statement is based. This right of inspection is a recognised part of the accounting relationship. If you refuse inspection, the tenant may withhold payment, and his objection period may, in certain circumstances, not begin to run.
For you as the owner, this means above all: keep all supporting records in good order and have them ready for a possible inspection. A well-documented statement is the best precaution against protracted disputes.
How Richter supports you with letting
The service charge statement is part of a well-run tenancy, and a well-run tenancy begins with the right letting. This is precisely where we come in. As an estate agency with more than sixty years of history and a network grown over decades, comprising more than 20,000 contacts in Düsseldorf and throughout North Rhine-Westphalia (NRW), we support owners in letting their property.
This includes the search for the right tenant, careful creditworthiness checks and well-considered contract drafting, in which, for instance, the apportionment of operating costs is cleanly agreed from the outset. On request, we work discreetly in the off-market segment, and we are always open to cooperation with other agents.
Detailed legal questions about a specific statement are best clarified with your own legal adviser or your tenants' association. We make sure that the foundations are right from the moment of letting.
