As a landlord/landlady, you have to prepare a service charge statement for your tenants once a year. In order for this to comply with the legal requirements, a number of factors must be taken into account. If your WEG is managed by Ralph and you have concluded the so-called special property management (SEV) with us, we will prepare the service charge statement for you on time and in compliance with the law as part of the service package.

Create service charge statement: What are service charges?

The annual service charge statement includes all ongoing costs that are incurred in addition to the rent for an apartment or house and may be passed on to the tenants. As a rule, one-off costs do not count as ancillary costs.

How to settle service charges yourself: Which service charges belong in the service charge statement?

You do not want a special property management (SEV), but want to create your service charge statement independently? No problem. The service charge settlement is prepared on the basis of the Operating Costs Ordinance. This stipulates that the following expenses belong in the service charge settlement:

• Building insurance
• Property tax
• Garden maintenance
• Cleaning costs for gutters and light wells
• Costs for street cleaning and waste collection
• Indoor and outdoor lighting
• Sewage charge
• Costs for heating and hot water
• Costs for elevators
• Stairwell cleaning
• Janitor costs
• Costs for communal antenna systems or cable television
• Costs for communal washrooms
• Maintenance costs for smoke extraction systems, smoke detectors, fire extinguishers, lightning conductors

Important: Include service charge agreement in the rental agreement

The payment of ancillary costs must be expressly agreed in the rental contract. However, the costs involved do not have to be listed in detail. If the rental agreement does not contain an explicit agreement on incidental costs, the rent is inclusive and covers all incidental costs.

These costs do not belong in the service charge statement

When you prepare a utility bill, there are costs that are not apportionable. These include, among others:

• Maintenance and repair costs
• Real estate transfer tax
• Income tax on rental income
• Legal expenses insurance
• Household contents insurance
• Property management costs and other administrative costs

When do you have to prepare the service charge statement at the latest?

The service charge statement must be prepared and submitted to the tenants within one year of the end of the billing period.

Example: You must prepare the service charge statement for 2025 and send it to your tenants by December 31, 2026 at the latest.

Compliance with the deadline is important, as tenants are released from the obligation to pay service charges if this deadline is not met. The same deadline applies to the service charge settlement after tenants have moved out.

Send the service charge statement to the employment agency

In cases where the tenant's rent is paid by the Employment Agency, the service charge statement must be sent directly to the agency. Frequently, however, the job center also settles the ancillary costs via a flat-rate rent without requiring a settlement of ancillary costs. The individual case determines which of the two possibilities comes into question.

Have a service charge statement drawn up, but correctly

Unfortunately, errors are often made when preparing utility bills - especially if they are prepared by a property management company that still works manually and has error-prone internal processes. In contrast, a professionally prepared statement of service charges from a modern property management company like Ralph is not only clear and easy to understand, but also provides a noticeable relief for you as a landlord/landlady.

Are you looking for a new property management company? Contact us for a free quote.

Common errors in service charge settlements

The service charge bill is a source of uncertainty for both tenants and landlords. The items are often not transparent or comprehensible and the question arises: Are all items really justified? In fact, these and other errors in utility bills are not uncommon.

We have summarized 8 common mistakes for you.

1) Deadline for the statement of operating costs is not met

As already mentioned, according to Section 566 (3) of the German Civil Code (BGB), you must send the service charge statement no later than 12 months after the end of the billing period. If this deadline is exceeded, tenants can usually refuse to pay any additional claims. The exceptions and special features as well as additional payments often lead to errors in the operating cost statement:

1a) Error-related exceptions and special features

• Late receipt: If the service charge statement is received late by the tenant, it may still be valid under certain conditions. However, as the landlord, you must be able to prove that the delay was not caused by your own fault.
• Termination of tenancy: Even if your tenants have already moved out, the 12-month deadline for the service charge statements remains in place.
• No statement: If you do not draw up a statement at all, the tenant has the right to withhold their advances on the operating costs.

1b) Errors in back payments

If it transpires after the service charge settlement that the tenant still has to make an additional payment, a limitation period of three years must also be observed for this claim. This period begins at the end of the year in which the claim arose.

2) Inaccurate designation of ancillary cost items

If you as a landlord or landlady prepare a service charge statement, a clear and detailed list of the cost items in the service charge statement is essential to avoid errors. It is crucial that the tenant can clearly allocate the costs based on the descriptions and any explanations. If this is not possible, there is no obligation to pay for these items and they must be removed from the service charge statement.

Example: Vague formulations such as "maintenance of technical systems" are not apportionable. They do not precisely define the systems concerned either in the tenancy agreement or in the operating cost statement and therefore do not fulfill the requirement of transparency vis-à-vis the tenants.

In principle, every item must be included in the tenancy agreement. If the contract only contains the general term "operating costs", then at least the costs listed in the current Operating Costs Ordinance are apportionable. If there is a specific list in the tenancy agreement, this is considered complete and binding. Only the service charges explicitly listed there can be charged to the tenant.

3) Incorrect billing period

A common error in service charge settlements is an incorrectly defined settlement period. This must be exactly twelve months, although the exact start and end dates can be handled flexibly - they do not necessarily have to follow the calendar year. However, if costs are billed that were incurred outside this period, the billing of service charges is inadmissible.

In certain situations, the settlement period can be shortened without the tenant's consent. This is the case, for example, if a new building is only completed and occupied during the current year.

4) Deviation from the rental agreement

An equally common mistake in utility bills is deviating from the rental agreement. The tenancy agreement stipulates whether and how operating costs are to be paid by the tenant, whether as a lump sum or an advance payment. Only the operating costs specified in the contract may be billed.

Some contracts list the apportionable costs in detail, others refer to the Operating Costs Ordinance (BetrKV). This defines 17 types of costs that you can pass on to tenants, from property tax and janitor costs to garden maintenance. Costs outside this list cannot be passed on.

5) One-off costs are charged

When preparing the service charge statement, it is important to differentiate between recurring operating costs and one-off expenses. Only regular expenses associated with the ongoing use of the building may be passed on to the tenants. One-off costs, on the other hand, are excluded from the apportionment. These include, for example

• Pest control measures
• Maintenance and repair expenses
• Costs for property management
• Insurance premiums for loss of rent or legal protection
• Expenses for postage or banking services

You may not charge your tenants for these items.

6) Incorrect billing of ancillary costs in the event of vacancy

Errors also frequently occur when billing service charges for vacancies. It is important to note that the ongoing operating costs for vacancies are the responsibility of the landlord/landlady and must be taken into account accordingly when billing service charges.

In order to ensure a fair distribution of costs, vacant apartments are assessed as if they were still normally occupied. This procedure prevents the remaining tenants from being unfairly burdened by the vacant apartments.

In the case of area-based cost allocation, the total area remains unchanged, i.e. vacant apartments are still included. If the apportionment is based on the number of persons, a fictitious person is included in the overall calculation for each unoccupied unit.

This procedure ensures that the costs of vacancies are borne by you as the landlord and are not passed on to the remaining tenants.

7) Incorrect distribution key

The allocation key is one of the most common sources of error in service charge settlements. Although the living space often serves as the basis for cost allocation, even this seemingly simple method is fraught with pitfalls.

The calculation of living space can vary depending on the underlying regulations. For example, the specifications of the Living Space Ordinance differ from those of DIN 277 with regard to the treatment of specific areas of the home. Precise consideration of elements such as window recesses, pitched roofs, balconies and conservatories is therefore important for correct area calculation.

8) Additional sources of error in the billing of heating costs

In addition to the costs for fuel, you may also pass on additional expenses to the tenants in the heating bill. These include the electricity costs for operating the heating system, maintenance of the system, fees for the chimney sweep, including sweeping and immission measurement costs, as well as the costs for recording consumption.

Repair costs for the heating system, on the other hand, are not apportionable and may not appear on the bill. In our experience, however, it often happens that landlords incorrectly declare these expenses as maintenance costs or operational electricity costs.

On time and in compliance with the law: Have service charge billing prepared with Ralph

Do you still take care of the preparation of the service charge statement yourself? By commissioning Ralph's condominium management, this task is taken off your hands. As a digital property management company, we know the exact requirements that you have to fulfill as a landlord/landlady and offer comprehensive services that take the pressure off you.

Conclusion Have a service charge statement drawn up: You will avoid these mistakes

As a landlord, you are obliged to prepare a service charge statement correctly. But billing service charges is often a challenge. Here's how it works: the complexity of the service charge statement leads to errors or missed deadlines - and a conflict between landlords and tenants is inevitable.

However, if you have your utility bill prepared by a professional property management company like Ralph, you won't make the following mistakes:

• Missed deadline
• Incorrect billing period
• Service charge agreement not included in the rental agreement
• Incorrect billing for vacancies
• Non-recoverable costs such as one-off costs are billed
• Overlooking a cost item
• Mandatory information not provided

Ralph supports landlords in preparing the service charge statement

At Ralph, we rely on a modern service and lean processes to simplify the preparation of service charge statements. Thanks to the use of modern technologies and efficient processes, we are able to make the preparation of service charge statements much easier.

This leads to greater customer satisfaction and enables us to offer our services as a digital property management company in a cost-efficient manner. Ralph is thus setting new standards in the property management industry and demonstrating what a modern and effective service charge settlement can look like.

Correctly billing service charges: this is how we do it

We use a digital billing program that enables the automatic recording and linking of all relevant data. This saves us time and minimizes the risk of errors. You can also view and check your invoices online at any time.

Discover how your condominium owners' association can benefit from Ralph on our property management costs information page and request your free quote here. If you have any questions, please do not hesitate to contact us.