Utility Billing 2026: The Complete Guide
All 17 operating cost types, deadlines, allocation keys, and current legal changes – explained clearly for property owners, landlords, and managers in Germany
The Nebenkostenabrechnung (utility billing statement) is one of the most complex topics in German tenancy law. Whether it is the property tax reform, CO2 cost sharing, or new heating cost ordinance (HKVO) obligations – the requirements grow more extensive every year. This guide provides a complete overview of all relevant operating cost types, deadlines, allocation keys, and the most common mistakes – fully up to date for 2026.
Table of Contents
What Are Nebenkosten / Betriebskosten?
In everyday German, the term Nebenkosten (ancillary costs) is commonly used. However, the correct legal term in German tenancy law is Betriebskosten (operating costs). The legal basis is § 556 BGB (German Civil Code) in conjunction with the Betriebskostenverordnung (BetrKV) – the German Operating Costs Ordinance.
According to § 1 para. 1 BetrKV, operating costs are the costs incurred by the owner or leaseholder through ownership of or leasehold interest in the property, or through the intended use of the building, ancillary buildings, facilities, installations, and the land on an ongoing basis.
The key word is ongoing: only regularly recurring costs qualify as operating costs. One-off expenses such as repairs, refurbishments, or modernisations do not.
Allocable Costs (umlagefähig)
- Property tax (Grundsteuer)
- Water supply & drainage
- Heating & hot water
- Waste disposal & street cleaning
- Building cleaning & garden maintenance
- Insurance (incl. natural hazard insurance)
- Caretaker / janitor
- Lift, lighting, chimney sweep
Non-Allocable Costs (nicht umlagefähig)
- Management costs (property management fees)
- Maintenance & repair
- Maintenance reserve (Instandhaltungsrücklage)
- Bank charges & account management
- Vacancy costs
- One-off costs (expert reports, litigation)
- Cable TV fees (since 01 July 2024)
- Repair costs
Important for the lease agreement: Operating costs can only be passed on to the tenant if this is agreed in the lease. The simplest and legally most secure formulation refers to Betriebskosten in accordance with § 556 BGB in conjunction with the BetrKV. Without such an agreement, the operating costs are already covered by the rent.
For a detailed explanation of deadlines and landlord obligations, see our article Utility Billing: Deadlines & Obligations for Landlords.
All 17 Operating Cost Types Under the BetrKV
The Betriebskostenverordnung (BetrKV) exhaustively lists 17 cost types in § 2 that may be passed on to tenants. Below, we explain each cost type – including the key changes for 2025/2026.
Property Tax (Grundsteuer)
The ongoing public charge on the property. Since 01 January 2025, the new property tax values following the reform apply. In many municipalities, the amounts have changed significantly – in some cases by 40 to 60 percent. Property tax remains fully allocable to tenants.
Water Supply (Wasserversorgung)
Costs of water consumption, basic charges, costs of water treatment systems, costs of water procurement (e.g. wells), costs of water meters and their calibration.
Drainage (Entwässerung)
Charges for property and building drainage (wastewater and rainwater), costs of drainage pumps and systems. Many municipalities distinguish between wastewater and stormwater charges.
Heating (Central Heating – Zentralheizung)
Fuel costs, operational electricity of the heating system, maintenance, servicing, emissions measurement, cleaning, and chimney sweep costs. Billing must comply with the HKVO (consumption-based 50–70%). New in 2026: CO2 cost sharing under the CO2KostAufG.
Hot Water Supply (Warmwasserversorgung)
Costs of hot water production (fuel, operational electricity), maintenance and cleaning of the system. For combined systems (heating + hot water), a split according to VDI 2077 or via heat meters is required.
Lift (Aufzug)
Operational electricity, supervision, servicing, monitoring, care, maintenance, and inspection (e.g. TÜV) of the lift. Repair and replacement costs are not allocable. Ground-floor tenants may be included if the lift is accessible to them.
Street Cleaning & Waste Disposal
Charges for street cleaning and waste collection, costs of operating a waste compactor, refuse chute, or similar facilities. Costs for organic waste and recycling bins are also included.
Building Cleaning & Pest Control
Costs of cleaning commonly used building areas (stairwell, corridors, basement, laundry room) and pest control. Both professional cleaning services and the proportionate wages of a caretaker for cleaning work are included.
Garden Maintenance (Gartenpflege)
Maintenance of garden areas (mowing lawns, trimming hedges, tree pruning), replacement of plants and shrubs, maintenance of playgrounds and access areas. One-off new landscaping is not allocable; ongoing maintenance and replacement planting are.
Lighting (Beleuchtung)
Electricity costs for external lighting and lighting of commonly used building areas (stairwell, corridors, basement, garage). Costs for timer switches and motion sensors are also included.
Chimney Sweep (Schornsteinfeger)
Costs of chimney sweep work: sweeping, inspections, fire hearth surveys, and emissions measurements. Since 2013, certain tasks (measurement, cleaning) may also be carried out by approved independent providers.
Property & Liability Insurance
Building insurance (fire, storm, water damage), glass and liability insurance. NEW since 2025: Natural hazard insurance (Elementarschadenversicherung) is now explicitly recognised as an allocable operating cost and is becoming increasingly important given the rise in extreme weather events.
Caretaker / Janitor (Hauswart)
Remuneration, social security contributions, and material costs of the caretaker, insofar as they perform operating cost activities (e.g. cleaning, winter service, garden maintenance). Caution: Activities already captured under other operating cost categories must not be charged twice.
Communal Antenna / Cable Connection
ATTENTION: Since 01 July 2024, the ancillary cost privilege for cable connections has been abolished without replacement (TKG amendment). Cable fees may NO LONGER be passed on to tenants. Tenants now enter into their own contracts with cable providers. In the 2024 billing statement, cable costs could only be included on a pro-rata basis up to 30 June 2024.
Laundry Facilities (Wascheinrichtungen)
Operating costs of the laundry room: electricity costs, maintenance and cleaning of communal washing machines and dryers. In practice, less relevant today as many apartments have their own washing machine connections.
Other Operating Costs (Sonstige Betriebskosten)
Catch-all provision for costs that do not fall under any of the above categories but serve the intended use: e.g. gutter cleaning, lightning conductor inspection, maintenance of smoke extraction systems, concierge costs. Important: These must be individually named in the lease agreement.
Combined Heating Systems (Nr. 4 + 5 combined)
For combined heating and hot water supply systems, the total costs are split between heating and hot water. The split is made either according to VDI guideline 2077 or via separate heat meters. In practice, the majority of multi-family buildings have combined systems.
For a detailed explanation of Hausgeld and the individual cost items in an HOA, see our guide Hausgeld for Condominiums Explained.
Property Tax in the Utility Billing Statement 2025/2026
The property tax reform (Grundsteuer-Reform) has been in effect since 01 January 2025. This has far-reaching consequences for utility billing: the new property tax values will first become visible in the statements for the year 2025 – i.e. those statements that must be prepared by no later than 31 December 2026.
What Has Changed?
The previous standard values (Einheitswerte – West: 1964 / East: 1935) have been replaced by new property tax values. The calculation now follows the Federal Model (in most federal states) or State Models (e.g. Bavaria, Baden-Württemberg, Hamburg, Hesse, Lower Saxony). In Hesse, the Area-Factor Method (Flächen-Faktor-Verfahren) applies, which considers both the property and building area as well as a location factor.
Impact on the Utility Billing Statement
Many municipalities have adjusted their assessment rates (Hebesätze) to implement the reform in a revenue-neutral manner. Nevertheless, there are significant shifts in practice:
- In some municipalities, increases of 40 to 60 percent for residential properties have been recorded
- Other properties benefit from significantly lower property taxes
- The changes depend heavily on location, plot size, and building type
- In Frankfurt am Main, the assessment rate has been significantly adjusted; the individual impact varies considerably
What Must Landlords and Managers Do?
- Carefully review new property tax assessments – observe the appeal deadline
- Adjust tenant advance payments accordingly (after receipt of the statement)
- Inform tenants early in cases of significant changes
- Update billing software with current property tax values
For detailed information on passing on the new property tax, see our blog article Passing Property Tax on to Tenants: What Landlords Need to Know.
Practical Tip: Review Property Tax Assessments
The error rate in the new property tax assessments is high. Check in particular the stated living area, the land value (Bodenrichtwert), and the classification of the building type. If there are discrepancies, it is worth filing an appeal within the one-month deadline after receipt of the assessment. As a professional property management company, at Verto we review all property tax assessments for our managed properties and flag potential errors.
CO2 Cost Sharing: The Step Model
Since 01 January 2023, the Kohlendioxidkostenaufteilungsgesetz (CO2KostAufG) – the CO2 Cost Sharing Act – governs how the CO2 costs for heating and hot water are split between landlord and tenant. The law requires the landlord to bear a portion of the CO2 costs, depending on the energy efficiency of the building.
CO2 Price 2025 and 2026
The CO2 price under the Brennstoffemissionshandelsgesetz (BEHG – Fuel Emissions Trading Act) is 2025: €55/tonne CO2. For 2026, a price corridor applies for the first time: the CO2 price will be between €55 and €65/tonne and will be determined by auction. From 2026, the actual price is set through BEHG trading.
The 10-Step Model
The allocation of CO2 costs is based on the specific CO2 emissions of the building in kilograms of CO2 per square metre per year (kg CO2/m²a):
| Step | CO2 Emissions (kg CO2/m²a) | Tenant Share | Landlord Share |
|---|---|---|---|
| 1 | < 12 | 100% | 0% |
| 2 | 12 – 17 | 90% | 10% |
| 3 | 17 – 22 | 80% | 20% |
| 4 | 22 – 27 | 70% | 30% |
| 5 | 27 – 32 | 60% | 40% |
| 6 | 32 – 37 | 50% | 50% |
| 7 | 37 – 42 | 40% | 60% |
| 8 | 42 – 47 | 30% | 70% |
| 9 | 47 – 52 | 20% | 80% |
| 10 | ≥ 52 | 5% | 95% |
Calculation Example
Building: Multi-family house, 10 units, 800 m² living area, gas heating, energy class E
Annual gas consumption: 120,000 kWh → approx. 24 tonnes CO2
Specific CO2 emissions: 24,000 kg / 800 m² = 30 kg CO2/m²a → Step 5
CO2 costs (2025): 24 t × €55/t = €1,320
Allocation (Step 5): Tenant 60% = €792 | Landlord 40% = €528
Per unit (tenant share): €792 / 10 = approx. €79.20/year = approx. €6.60/month
Note for landlords: The CO2 cost allocation must be disclosed in every heating cost statement. The landlord must determine the CO2 emissions of the building and identify the applicable step. For district heating, the supplier is obliged to communicate the CO2 content. The CO2 cost allocation does not apply to listed buildings (Denkmalschutz) where energy-efficient renovation would be unreasonable.
Heating Cost Billing: HKVO Requirements 2026
The Heizkostenverordnung (HKVO – German Heating Costs Ordinance) sets specific requirements for the billing of heating and hot water costs. For 2026, two key obligations are particularly relevant:
1. Remotely Readable Meters: Deadline 31 December 2026
By no later than 31 December 2026, all metering devices for heating and hot water must be replaced by remotely readable devices (§ 5 para. 2 HKVO). This applies to:
- Heat cost allocators (HKV) – must be upgraded to radio-based systems
- Heat meters – must be remotely readable
- Hot water meters – must be remotely readable
- Cold water meters (where relevant to hot water billing)
If you have not yet upgraded, you must act now. Depending on the size of the building, the upgrade can take several months. It is advisable to obtain quotes from metering service providers early and complete the upgrade by autumn 2026 at the latest.
2. Monthly Consumption Information (UVI)
Buildings with remotely readable metering devices already installed must provide residents with monthly consumption information (UVI – Unterjährige Verbrauchsinformation) (§ 6a HKVO). This must include:
- The current month's consumption (heating and, if applicable, hot water)
- A comparison with the same month of the previous year
- A comparison with an average consumer
The UVI can be provided in paper form or electronically (e.g. via a web portal or by email).
3. Tenant's Right to Reduce (3%)
If the landlord or building owner violates their HKVO obligations (e.g. no consumption metering, no remotely readable devices, no UVI), the tenant has the right to reduce their share of heating and hot water costs by 3% (§ 12 HKVO).
For further details on the upgrade requirements, see our article Remotely Readable Meters: Mandatory by 2026.
HKVO Billing: The 50/70 Rule
The Heating Costs Ordinance requires that 50 to 70 percent of heating and hot water costs be billed based on consumption, with the remainder based on living area. The exact allocation key (e.g. 50/50 or 70/30) is set in the lease agreement or by resolution of the owners' association. A 50/50 split is the most commonly used.
Allocation Keys: Which One Is Right?
The allocation key (Verteilerschlüssel) determines how the total costs of an operating cost type are distributed among the individual tenants. Choosing the correct key is legally significant: a wrong key can make the entire billing statement contestable.
Living Area (Wohnfläche)
The most common allocation key. Applies as the statutory default if the lease does not specify otherwise (§ 556a para. 1 BGB). Fair for consumption-independent costs such as property tax, insurance, or street cleaning.
Number of Persons (Personenzahl)
Distributes costs based on the number of persons living in the apartment. Fair for consumption-dependent costs such as water or waste, where consumption strongly correlates with household size. Must be agreed in the lease.
Consumption (Verbrauch)
Billing based on actual consumption as measured by meters. The fairest method for individually measurable costs. For heating and hot water, consumption-based billing is even legally mandated by the HKVO.
Co-Ownership Shares (MEA)
Distribution based on the co-ownership shares registered in the land register (Grundbuch). Primarily relevant in HOA management for Hausgeld billing. For the utility billing statement towards tenants, living area is typically used instead.
Key Rules for Allocation Keys
- Without a lease provision, living area applies as the default (§ 556a para. 1 BGB)
- The landlord may unilaterally switch to consumption-based allocation for good cause (§ 556a para. 2 BGB)
- For heating and hot water costs, consumption-based billing is mandatory (HKVO)
- The chosen key must be applied consistently and transparently
- A change in key must be communicated to the tenant before the start of the billing period
Deadlines and Legal Consequences
Compliance with statutory deadlines is of critical importance in utility billing. Missing deadlines has severe legal consequences – particularly for the landlord.
Billing Deadline: 12 Months (§ 556 para. 3 BGB)
The operating cost statement must reach the tenant no later than 12 months after the end of the billing period. For a calendar-year billing period (01 January to 31 December 2025), the statement must be delivered by 31 December 2026 at the latest.
Tenant's Objection Period: 12 Months (§ 556 para. 3 sentence 5 BGB)
The tenant must raise objections against the statement within 12 months of receipt. After this deadline, the tenant can generally no longer contest the statement – unless the late objection was not their fault.
Statute of Limitations: 3 Years (§ 195 BGB)
Both the landlord's additional payment claim and the tenant's refund claim are subject to a 3-year statute of limitations. The limitation period begins at the end of the year in which the claim arose (i.e. upon receipt of the statement or expiry of the billing deadline).
Consequences of Late Billing
The legal consequences of missing the deadline are severe:
- The landlord loses their right to additional payment – the tenant does not have to pay
- Any credit due to the tenant must still be refunded even if the statement is late
- Exception: The landlord was not at fault for the delay (e.g. the metering service provider delivered the heating cost data late)
- The burden of proof for the absence of fault lies with the landlord
For more details on deadlines, see our article Utility Billing: Deadlines & Obligations for Landlords.
Common Mistakes in Utility Billing
Studies show that every second utility billing statement in Germany contains errors. The following ten mistakes occur particularly frequently – and can render the statement invalid or lead to significant repayment obligations for the landlord.
Non-allocable costs included
Problem:
Management costs, maintenance expenses, or repairs are passed on to the tenant.
Solution:
Only the 17 cost types under § 2 BetrKV are allocable. Check every item and remove non-allocable portions.
Wrong allocation key
Problem:
A different allocation key is used than agreed in the lease, or the key is changed during the billing period.
Solution:
Use the allocation key as per the lease agreement. Changes only before the start of a new billing period and with prior notification.
Missing prior-year comparison
Problem:
The statement does not include a comparison with advance payments or the previous year’s result.
Solution:
While not strictly required by law, BGH case law mandates disclosure obligations in cases of significant cost increases.
Billing period exceeds 12 months
Problem:
The billing period covers more than 12 months or does not align with the lease agreement.
Solution:
The billing period may not exceed 12 months (§ 556 para. 3 BGB). In case of tenant changeover: pro-rata daily billing.
Total costs not disclosed
Problem:
The statement only shows the tenant’s share, not the total building costs.
Solution:
A formally correct statement must include: total costs, allocation key, tenant’s share, advance payments, and balance.
Double billing for caretaker costs
Problem:
Caretaker activities are charged both under the caretaker item and under other items (e.g. garden maintenance, cleaning).
Solution:
Caretaker costs must be split: activities already captured under other operating cost types must not be charged twice.
Cable TV fees still allocated
Problem:
Despite the abolition of the ancillary cost privilege from 01 July 2024, cable fees are still fully included in the statement.
Solution:
Remove cable costs entirely from 01 July 2024 onwards. For the 2024 statement: pro-rata only up to 30 June 2024. From 2025: not at all.
CO2 cost allocation missing or incorrect
Problem:
The CO2 cost sharing under the CO2KostAufG is not applied, or the wrong CO2 emission rate is used.
Solution:
Disclose CO2 cost allocation in every heating cost statement. Correctly determine the specific CO2 emissions and apply the right step.
Formal errors in the statement
Problem:
The statement is not comprehensible to the tenant: missing total area, unclear billing period, omitted advance payments.
Solution:
The statement must be formally correct: billing period, total costs per item, allocation key, individual share, advance payments, result.
Vacancy costs allocated to tenants
Problem:
The landlord distributes operating costs only across actually rented units instead of all units.
Solution:
The vacancy risk is borne by the landlord. Operating costs must be distributed across all units (including vacant ones).
Checklist for Landlords and Managers
A structured approach ensures the quality of your utility billing statement and minimises the risk of errors and objections. Use the following checklist for the entire billing process.
Phase 1: Preparation
- Gather all invoices and receipts for the billing period
- Record consumption data from meters (heating, water, communal electricity)
- Review property tax assessments – especially following the 2025 reform
- Determine the building’s CO2 emissions (for CO2 cost sharing)
- Update the tenant register with living areas, number of persons, and tenancy periods
- Document vacancy periods
- Review lease agreements for agreed allocation keys
Phase 2: Preparation of the Statement
- Determine and document total costs per operating cost type
- Remove non-allocable cost portions (management, maintenance, repairs)
- Apply the correct allocation key per cost type
- Bill heating costs in accordance with the HKVO (50–70% consumption, remainder by area)
- Calculate and disclose CO2 cost sharing under the CO2KostAufG
- Exclude cable TV fees from 01 July 2024 onwards
- Correctly classify natural hazard insurance as allocable operating cost
- Offset tenant advance payments
- Calculate the balance (additional payment or credit)
Phase 3: Review
- Check formal completeness: billing period, total costs, key, share, advance payments, balance
- Plausibility check: Are the costs within the market-standard range?
- Comparison with previous year’s statement: Are there notable deviations?
- Review caretaker costs for double billing
- Check consumption values for plausibility (outliers?)
- Verify area figures against current data
- Four-eyes principle: Have a second person review the statement
Phase 4: Dispatch & Follow-up
- Dispatch the statement on time (no later than 12 months after the end of the billing period)
- Document receipt (registered letter with proof of posting or personal handover with receipt)
- Enable document inspection: Tenant has the right to inspect original receipts
- Adjust advance payments for the next year (in case of significant deviations)
- Respond to tenant objections within a reasonable period
- Process additional payment or credit refund within 30 days of receipt
As a professional rental management company, Verto prepares the utility billing statement for all managed properties on time and in full legal compliance. As part of our HOA management service, we also ensure correct Hausgeld billing with all required details.
Frequently Asked Questions About Utility Billing
Answers to the most important questions about the Betriebskostenabrechnung for landlords, managers, and property owners.
By when must the utility billing statement (Nebenkostenabrechnung) be delivered?
The utility billing statement must reach the tenant no later than 12 months after the end of the billing period (§ 556 para. 3 of the German Civil Code, BGB). For a billing period from 01 January to 31 December 2025, the deadline is 31 December 2026. If the landlord misses this deadline, they can no longer demand an additional payment – but any credit in favour of the tenant must still be refunded.
What may not be included in the utility billing statement?
Non-allocable costs include: management fees (property management costs), maintenance and repair costs, reserves, bank charges, vacancy costs, and one-off costs such as expert reports or litigation costs. Repair costs may not be passed on to tenants either – only ongoing operating costs as defined in § 1 BetrKV (German Operating Costs Ordinance).
How is property tax handled after the 2025 reform in the utility billing statement?
Property tax (Grundsteuer) remains fully allocable to tenants (§ 2 No. 1 BetrKV). Since 01 January 2025, the new property tax values apply. Many municipalities have adjusted their assessment rates, resulting in significant changes – in some cases increases of 40 to 60 percent. The new amounts will first appear in the billing statement for 2025, which must be prepared by the end of 2026.
How does the CO2 cost sharing between landlord and tenant work?
Since 01 January 2023, landlords and tenants share the CO2 costs for heating and hot water under the CO2KostAufG (CO2 Cost Sharing Act). The allocation is based on the building’s energy class in a 10-step model: the worse the energy efficiency, the higher the landlord’s share (up to 95%). For very efficient buildings, the tenant bears 100% of the CO2 costs. The CO2 price is €55/tonne in 2025 and will be in the BEHG corridor of €55–€65/tonne in 2026.
Do cable TV fees still need to appear in the utility billing statement?
No. Since 01 July 2024, cable TV fees (broadband costs, communal antenna systems) may no longer be passed on to tenants as operating costs. The so-called ancillary cost privilege for cable connections has been abolished without replacement (TKG amendment). Tenants now enter into their own contracts with cable providers. In the 2024 billing statement, cable costs could only be included on a pro-rata basis up to 30 June 2024.
What is the difference between Nebenkosten and Betriebskosten?
In German tenancy law, the term Nebenkosten (ancillary costs) is commonly used, but the correct legal term is Betriebskosten (operating costs), as defined in § 556 BGB and § 1 BetrKV. Operating costs are the ongoing costs incurred by the owner through the intended use of the building. Nebenkosten is the colloquial umbrella term and may also include non-allocable costs. The lease agreement should clearly refer to Betriebskosten as per the BetrKV.
Which allocation key must the landlord use?
The allocation key (Verteilerschlüssel) is generally based on the lease agreement. Common options are living space (Wohnfläche), number of persons (Personenzahl), consumption (Verbrauch), or co-ownership shares (Miteigentumsanteile). If the lease does not specify, living space applies as the default (§ 556a BGB). For heating and hot water costs, the HKVO mandates a consumption-based share of 50 to 70 percent.
What can I do if I missed the deadline for the utility billing statement?
If the landlord misses the 12-month deadline, their claim for additional payment lapses – unless the delay was not their fault (e.g. because the energy supplier delivered the billing data late). However, any credit due to the tenant must be paid out regardless of the missed deadline. It is advisable to plan the billing process early and engage a professional property management company.
Utility Billing? Leave It to the Professionals.
Utility billing is becoming more complex every year: property tax reform, CO2 cost sharing, HKVO obligations, and increasing legal requirements. At Verto, we handle the complete preparation, review, and timely delivery of your operating cost statement – legally compliant and transparent.