Service charge vs ancillary costs —what may I pass on?
As the landlord of a condominium flat, you pay a service charge to the homeowners' association (WEG) — and you want to recover the service charges from your tenant. But not every cent of the service charge is recoverable. We explain the distinction, with a worked example.
The service charge: what it is
As a flat owner (member of the owners' association) you pay Service charge (condominium) to your property management. It includes:
- Ongoing operating costs (heating, water, refuse, caretaker, insurance)
- Maintenance reserve (for future repairs)
- Administration costs of the WEG (property manager fees)
- Sonderumlagen (bei Bedarf, z.B. Heizungs-Neuanschaffung)
The crucial distinction — what can you pass on?
Only the ongoing operating costs (within the meaning of German operating-costs regulation) can be passed on to the tenant. You may NOT pass on:
- Maintenance reserve — belongs to the landlord (the value share of your flat)
- Administration share of the service charge (property manager fees)
- Special levies for increase in value/modernisation (extension, new heating system)
- Repairs to private property (bathroom renewal, floor renovation of your flat)
Example: 80 m² freehold flat in Munich
You pay monthly 320 € Hausgeldto the property management. Breakdown according to the annual statement:
- Heating + hot water: 95 € → apportionable ✓
- Wasser kalt + Abwasser: 35 € → umlegbar ✓
- Refuse collection: 18 € → recoverable ✓
- Hausmeister + Reinigung: 32 € → umlegbar (anteilig — Verwaltungsanteil abziehen!) ⚠️
- Building insurance: 14 € → recoverable ✓
- Lift maintenance + electricity: 12 € → recoverable ✓ (even on the ground floor)
- Verwaltungskosten WEG-Manager: 24 € → NICHT umlegbar ✗
- Maintenance reserve: 90 € → NOT recoverable ✗
Passable on to the tenant: approx. €206 · NOT passable on (landlord bears): approx. €114
Practical implementation
Step-by-step procedure:
- 1. Request the annual service-charge statement from the WEG management (usually arrives Jan/Feb for the previous year)
- 2. Check each item: ongoing operating cost or not?
- 3. For mixed items (e.g. caretaker): estimate a 70/30 split
- 4. Transfer them into your own service-charge statement — per flat
- 5. If the building management uses a "lump-sum item": request an itemised receipt
Common mistakes
- Passing on the entire service charge 1:1 (including reserve + administration) — invalid, the tenant can reclaim it
- Passing on non-recurring special levies (e.g. lift refurbishment) — not permitted
- Declaring your own modernisation outlays as "service charge" — risk of tax evasion
- Flat-rate apportionment without the homeowners' association (WEG) annual statement — formally invalid
How Rentprime helps you
When you upload the receipt, Rentprime recognises that it's a "service charge" and actively asks: "Which components are ongoing items under the German Operating Costs Ordinance (German operating-costs regulation)?" Based on the item description (heating, water, refuse vs. reserve, administration), the AI suggests the correct classification. You can adopt the suggestions with a click — the system makes the correct split in the service-charge statement automatically.
Related topics: German operating-costs regulation explained · What can be passed on?