Service charges and cost allocation in Germany: the complete guide

A service charge statement allocates the recurring costs of a property to the people who use it. Anyone who lives in a German owners association or lets out a flat should keep two statements clearly apart: the WEG annual statement among the owners, and the tenancy-law service charge statement towards tenants. This guide explains both, shows the correct allocation key, the special rules for heating costs and the decisive deadlines, with the relevant provisions from the WEG, the German Civil Code (BGB) and the Operating Costs Ordinance (BetrKV).

WEG annual statement and service charge statement: two different things

In practice these two statements are often confused, although they follow different rules.

The WEG annual statement concerns the internal relationship among the condominium owners. Once a year the manager accounts for how the community’s money was used and sets income against expenditure (§ 28 WEG). Here all community costs are distributed, including the manager’s fee and the contribution to the maintenance reserve (Erhaltungsrücklage).

The tenancy-law service charge statement concerns the relationship between landlord and tenant (§ 556 BGB). Here only the allocable operating costs may be passed on, but not management or repair costs.

Anyone who lets a condominium is affected by both: as an owner they pay the monthly advance (Hausgeld) and receive the WEG annual statement; as a landlord they pass on the allocable portion to the tenant. This interface is exactly where most errors occur, because non-allocable items from the WEG statement are carried over into the tenancy statement unchecked.

What counts as operating costs?

Which costs are allocable at all is governed by the Operating Costs Ordinance (BetrKV). Under § 1 BetrKV, operating costs are those that the owner incurs on an ongoing basis through ownership of the land or its intended use. The exhaustive catalogue in § 2 BetrKV lists 17 items:

The key word is recurring. One-off expenses are not operating costs. Not allocable are therefore in particular:

• management costs (for example the manager’s fee in a tenancy)
• maintenance and repair, that is repairs and the upkeep of the building

Example: Servicing the lift is an allocable operating cost. Replacing the broken lift motor is repair work and therefore not allocable in a tenancy, even if both appear on the same contractor invoice. The items must be separated.

The allocation key: who bears which share?

The allocation key determines the standard by which the total costs are distributed across the individual units. Here too tenancy law and condominium law differ.

In a tenancy

Unless the parties to the lease have agreed otherwise, § 556a (1) BGB applies the share of living space as the default key. Costs that depend on measured consumption or causation must instead be allocated by a consumption- or causation-based standard, for example heating and water by meter reading. The landlord may switch to a consumption-based standard by declaration in text form before the start of an accounting period (§ 556a (2) BGB).

In an owners association

Under § 16 (2) WEG, owners bear the costs in principle in proportion to their co-ownership shares (Miteigentumsanteile) as registered in the land register. Since the WEG reform (WEMoG, in force since 1 December 2020) owners may resolve a deviating allocation for individual costs or types of cost (§ 16 (2) sentence 2 WEG). A simple majority is sufficient, because § 25 (1) WEG requires only the majority of the votes cast. Before the reform a lasting change to the allocation key usually required an agreement of all owners, so this is now considerably easier.

Common allocation keys are:

• living space (in square metres)
• co-ownership shares (the default in a WEG)
• number of units (equal per flat)
• number of occupants (for refuse or water, for instance)
• measured consumption (heating, water)

Example: A community resolves to allocate gardening costs by living space rather than by co-ownership shares, because the shares reflect actual use poorly. Since the WEMoG a simple majority resolution at the owners meeting is enough.

Heating costs: the important special rule

Heating and hot water costs are not at anyone’s free discretion but follow the Heating Costs Ordinance (HeizkostenV). Under § 7 HeizkostenV, at least 50 and at most 70 percent of heating costs must be allocated by measured consumption; the remaining share is allocated by living or usable area. Consumption-based billing is therefore mandatory, not optional.

If billing is not consumption-based contrary to the ordinance, the user may reduce their heating cost share by 15 percent (§ 12 (1) HeizkostenV). Since the 2021 amendment there are further reductions of 3 percent each where no remotely readable metering is installed or where the running consumption information is missing. Note that this right of reduction applies in a tenancy, not in the internal relationship between an individual owner and the owners association.

Deadlines: by when must the statement be issued?

In practice deadlines often decide real money.

In a tenancy the landlord must provide the tenant with the statement no later than the end of the twelfth month after the end of the accounting period (§ 556 (3) BGB). After this deadline a back-payment claim is barred, unless the landlord was not responsible for the delay. A credit balance, by contrast, must be refunded even where the statement is late. The tenant in turn must raise objections to the statement no later than the end of the twelfth month after receipt of the statement.

In an owners association the manager prepares the annual statement and an asset report after the end of the financial year. Since the WEMoG owners no longer resolve on the entire statement but only on the balancing amount (Abrechnungsspitze), that is the collection of additional contributions or the adjustment of the resolved advances (§ 28 (2) WEG). The budget and the advances derived from it (the Hausgeld) are resolved for the current year under § 28 (1) WEG.

Advance payments or a flat rate: two models

Service charges can be agreed in two ways (§ 556 (2) BGB):

• As an advance payment (Vorauszahlung): the tenant pays a monthly instalment that is settled once a year. Credit is refunded, shortfalls are charged. Advance payments may only be agreed in a reasonable amount
• As a flat rate (Pauschale): the payment settles the service charges and there is no annual statement. A later increase is only possible if the contract provides for it (§ 560 (1) BGB); if costs fall, the flat rate must be reduced (§ 560 (3) BGB)

After a statement, either party may adjust the advance payments to a reasonable amount by declaration in text form (§ 560 (4) BGB). This corrects recurring large back-payments or permanently excessive advances.

How to check a service charge statement

A formally proper statement must be comprehensible to the tenant. As a minimum it contains:

• the compilation of the total costs per cost type
• the allocation key applied
• the calculation of the tenant’s share
• the deduction of the advance payments made

The tenant also has the right to inspect the underlying receipts (invoices, fee notices, meter records). Only inspection of the receipts makes a real check possible.

Example: The building’s annual water costs are EUR 3,000. The building has 600 sqm of living space, the flat 75 sqm. The share by living space is 75/600, that is 12.5 percent or EUR 375. If the tenant paid EUR 30 per month in advance (12 x 30 = EUR 360), the result is a back-payment of EUR 15. Consumption-dependent items such as heating are allocated by meter reading rather than by area.

Common mistakes in practice

• Non-allocable costs passed on: the manager’s fee or repairs end up in the tenancy statement. In a tenancy this is not permitted
• Wrong or unauthorised key: in a WEG the statutory standard is departed from without a valid resolution
• Accounting deadline missed: the twelve-month deadline of § 556 (3) BGB is exceeded and the back-payment claim lapses
• Heating not billed by consumption: the tenant’s 15 percent right of reduction applies
• Vacancy handled wrongly: the costs of vacant units must be borne by the landlord or the community, not by the other users

Service charges in Frankfurt and the Rhine-Main region

The level of individual operating costs varies considerably by region. Property tax as a recurring public charge (§ 2 No. 1 BetrKV) depends on the municipal assessment rate and was recalculated nationwide as part of the property tax reform from 2025; owners in Frankfurt should check the changed amounts in the statement. Water and waste water charges also vary between Frankfurt and surrounding municipalities such as Offenbach, Bad Homburg or Eschborn. For disputes over let flats the local court at the location of the flat has jurisdiction; in WEG matters § 43 (2) WEG gives exclusive jurisdiction to the court at the location of the property, which for Frankfurt properties is the Amtsgericht Frankfurt am Main.

A careful, timely and transparent statement is therefore not an end in itself: it protects owners and communities from reductions, lost back-payments and disputes. Professional property management prepares the statement so that costs are recoverable and audit-proof, while keeping every deadline - for let properties, our rental management in Frankfurt takes care of this.

Editorial responsibility: digo.immo Verwaltung & Invest - certified residential property manager under § 26a WEG (IHK Frankfurt), licence under § 34c GewO. About the certification

This article provides general information only and does not replace individual legal advice. Legal status: 11/07/2026; laws and case law may change. No warranty is given as to completeness, accuracy or timeliness. When in doubt, please seek qualified advice.