Preparing the service charge statement: How landlords correctly create the operating cost statement

For landlords, the utility bill is one of the most important annual administrative tasks. It ensures that operating costs are transparently settled between landlord and tenant.

In practice, however, creating a utility bill often leads to uncertainties. Which costs may be passed on? Which deadlines apply? And how must a statement be structured to be legally correct?

Errors in the operating cost statement can result in additional demands no longer being enforceable or leading to disputes with tenants.

In this article, you will learn step-by-step how landlords create a utility bill, which costs are recoverable, and how digital processes can support property management.

What does utility billing mean?

The utility bill (also known as the operating cost statement) is the annual settlement of the ongoing operating costs of a property. Landlords distribute the incurred costs proportionally among the tenants. The prerequisite is that these costs have been agreed upon in the rental agreement as recoverable.

The utility bill provides transparency about what costs were incurred during the billing period and how they are distributed among the individual rental parties.

Difference between utilities and operating costs

In everyday life, the terms utilities (Nebenkosten) and operating costs (Betriebskosten) are often used interchangeably. Legally, however, the operating cost statement refers to costs that arise regularly from operating a property.

Typical examples are:

• Heating costs

• Water costs

• Waste disposal

• House cleaning

• Garden maintenance

These costs can be passed on to tenants, provided this has been contractually agreed.

Objective of the utility bill

The utility bill serves several functions. It transparently shows tenants what costs actually occurred and allows landlords to correctly allocate the operating costs.

The statement serves to:

• Present operating costs transparently

• Offset advance payments against actual costs

• Determine additional payments or credits

This makes it a central component of managing tenancies.

Which costs may be included in the utility bill

Not all costs surrounding a property may be passed on to tenants. The decisive factor is the Operating Costs Ordinance (BetrKV), which defines which costs qualify as operating costs.

Recoverable operating costs

Typical recoverable operating costs include:

• Heating and hot water costs

• Water supply

• Waste disposal

• Building cleaning

• Garden maintenance

• Janitor costs

• Lighting of common areas

These costs arise regularly from the operation of the property.

Non-recoverable costs

Landlords are not allowed to pass certain costs on to tenants. These primarily include maintenance and administration costs.

Examples are:

• Repairs to the building

• Modernization measures

• Administration costs

• Bank fees

As a matter of principle, landlords must bear these costs themselves.

Which deadlines landlords must observe

Clear statutory deadlines apply to the utility billing process. Failure to meet these can have financial consequences for landlords.

Billing period of twelve months

Landlords must prepare the utility bill and send it to the tenant no later than twelve months after the end of the billing period.

Example:

If the billing period ends on December 31st, the statement must be delivered by December 31st of the following year at the latest.

Additional demands are generally no longer possible after this date.

Objection period for tenants

Tenants also have a statutory deadline after receiving the statement. They can raise objections to the utility bill within twelve months.

Within this period, tenants can review the statement and contest any errors.

Typical errors in operating cost statements

In practice, errors often occur in the preparation of utility bills. These can lead to statements being contested or additional demands being invalid.

Incomplete statements

A utility bill must be clearly comprehensible. If important details are missing, it may be legally invalid.

Typical problems are:

• Missing allocation key

• Incomplete cost breakdown

• Missing prepayments

Such errors make it difficult for tenants to verify the details.

Incorrect cost allocation

Errors in the allocation key can also cause problems.

Examples are:

• Incorrect living space details

• Unagreed allocation keys

• Incorrect consumption values

These errors frequently lead to disputes between tenants and landlords.

How digital processes support property management

Digital solutions can simplify many administrative tasks in property management. Structured digital processes also help in creating utility bills.

Centralized management of billing data

Property management software can store operating costs, documents, and billing data in one central location.

This makes it easier to:

• Manage cost items

• Verify statements

• Document tenancies

As a result, creating utility bills becomes more structured.

More efficient property management

Digital processes help not only with billing but also with other administrative tasks related to tenancies.

These include, for example:

• Leasing processes

• Communication with tenants

• Contract management

You can learn more about this here:

Renting out real estate professionally: How EverReal revolutionizes the renting process

Digital contract processes are also becoming increasingly important:

Digital signatures in rental agreements: Benefits, legal aspects, and implementation

Step-by-step: Creating a utility bill

To prepare a utility bill correctly, landlords should proceed systematically. The process consists of several clear steps.

Step 1: Determine total costs

First, all operating costs of the billing period must be compiled.

These include, for example:

• Heating costs

• Water costs

• Insurances

• Janitor costs

These costs form the foundation of the statement.

Step 2: Determine the allocation key

Next, you must specify how the costs will be distributed among the tenants.

Typical allocation keys are:

• Living space

• Number of occupants

• Consumption values

The allocation key must be agreed upon in the rental contract.

Step 3: Distribute costs to tenants

In the next step, the total costs are distributed among the individual rental parties based on the allocation key.

This involves calculating:

• The tenant's share of the total costs

• Utility prepayments already made

• Potential additional payment or credit

This creates the actual utility statement.

Step 4: Document and send the statement

Finally, the utility bill must be documented and sent to the tenant.

A complete statement should include:

• Billing period

• Total costs of the property

• The applied allocation key

• The tenant's share

• Prepayments made

Only if this information is complete is the statement considered formally correct.

The utility bill is a core component of property management. Landlords must comply with both legal regulations and contractual agreements.

A correct operating cost statement ensures transparency between landlord and tenant and helps prevent disputes.

Digital processes and structured property management can help landlords organize operating costs clearly and complete administrative tasks more efficiently.

How do you create a utility bill?

To create a utility bill, landlords must first record all operating costs for the billing period, then distribute the costs to the tenants using an allocation key, and finally document the statement.

Which costs are landlords allowed to pass on?

Mainly ongoing operating costs such as heating costs, water costs, waste disposal, or janitor costs can be passed on.

What deadline applies to utility bills?

Landlords must prepare and deliver the utility bill no later than twelve months after the end of the billing period.

What happens if the statement is delivered late?

If the deadline is missed, landlords can usually no longer assert any additional demands. Tenants, however, still retain their claim to any potential credits.