What’s included in your rent? Everything you need to know about ancillary costs in Germany
It can be stressful and confusing when yet another bill lands in your mailbox. But don’t panic! Check out our comprehensive guide to ancillary costs in Germany and learn what’s included in your rent.
1 min read
Whether you’re in Berlin, Leipzig, or Düsseldorf, the cost of living is increasing all across Germany. And as if rising rent and energy costs weren’t enough, we also need to think about rising ancillary costs! But what exactly are ancillary costs? How are they calculated? And can you do anything to reduce them? This article is here to answer these questions and much more. You’ll learn which costs renters pay, how high these costs are on average, and when landlords are allowed to raise ancillary costs. And if you own your own place, we’ll tell you what ancillary costs you can deduct from your taxes, as well as practical tips and finance tools to help you save along the way. Let’s go!
What are ancillary costs?
Whether you rent or own an apartment, ancillary costs are like most other living expenses — you just can’t avoid them. Apartments need regular maintenance and care, such as garbage collection, yardwork, and much more. But there are other things that need to be paid as well, from insurance and property taxes down to the lighting in the hallways. You’ll find a detailed list of all the costs below — but first, let’s look at the differences between operating costs and ancillary costs.
Operating costs and ancillary costs: what’s the difference?
Although the two terms are often used interchangeably, ancillary costs (“Nebenkosten” in German) and operating costs (“Betriebskosten”) do have some minor differences. As the name suggests, operating costs include the regular expenses of operating a real estate property. These are costs that the landlord can pass on to their renters. This means that you pay operating costs as part of your rent, and they should be laid out clearly in your rental contract.
The landlord’s ancillary costs are costs that can’t be passed on to renters. These include the landlord’s account operation fees and certain kinds of renovation costs. These days, it’s common to use the terms interchangeably — and in a way, your landlord’s operating costs become your ancillary costs once they get passed on to you. Still, it’s important to understand that there’s a difference, especially if you’re renting property. When you receive your annual statements, check that these two types of costs are being categorized correctly so that you don’t pay money you don’t actually owe.
What are ancillary costs for tenants?
In your rental contract, you’ll find an overview of your ancillary costs. For an apartment in a rental property, these may include expenditures for maintenance, entryway and hallway cleaning, and lighting for common areas. In principle, as a resident of the building, you’re expected to contribute to these costs, but not to the landlord’s bookkeeping fees or to general building repairs. If you rent a single-family home, you probably won’t have a building caretaker or hallway maintenance as part of your ancillary costs.
What are ancillary costs for landlords?
Anyone who rents out an apartment needs to organize the drinking water supply, garbage collection, and much more. In addition to the ancillary costs that can be passed on, there are other costs that landlords have to take care of on their own. These include bank account maintenance fees, phone and postage fees, and repairs and renovations. Pest control should also fall under landlord costs, unless it becomes a regular maintenance expense.
What do ancillary costs include?
We’ve already covered some examples, but here’s a list of all the ancillary costs you’ll need to consider:
- Property tax (a type of tax levied on owned property)
- Building and liability insurance
- Irrigation and drainage (expenses for drinking water maintenance, as well as wastewater and rainwater removal)
- Hot water supply (unless there’s a water heater in each unit)
- Heating costs (unless you have a gas heater)
- Additional costs for heating maintenance (this also applies to gas boilers)
- Lighting in the hallways, basement, and courtyard
- Hallway cleaning
- Street cleaning
- Garbage collection (the provision and collection of various bins, including household waste, plastic, and paper)
- Garden maintenance (e.g. lawn mowing, tree trimming, etc.)
- Winter maintenance (e.g. ice and snow removal)
- Chimney sweeping
- Building caretaker (the salary for a dedicated building manager)
- Cable fees (although these costs can no longer be passed on to renters after June 30, 2024)
- Elevator costs (if applicable)
- Laundry room access (if applicable)
What are “cold” ancillary costs?
Here, the situation is similar to what we call the “cold” and “warm” rental prices. Cold ancillary costs are all the ones mentioned above, except the hot water supply. Anyone who has a gas heater for heat and water receives a monthly gas bill directly from their gas provider.
What are “warm” ancillary costs?
Warm ancillary costs include expenses for heating and hot water (if these are paid for by the landlord). Basically, these are all of the operating costs listed above. It’s important to note: With the exception of hallway lighting, electricity isn’t part of your ancillary costs, as you pay your electric bill separately.
Ancillary costs: calculation and billing
Feeling confused about your annual statement and why you owe more money? Don’t worry, that’s totally normal. The annual utility bills are also annoying for landlords, because there are some special factors that require a lot of calculation. Let’s take a closer look!
Annual statements for ancillary costs
When you pay monthly rent to your landlord, you’re usually also pre-paying an amount toward your annual ancillary costs. This means that the sum in your rental contract is just an estimate. That’s why you receive an annual statement (“Nebenkostenabrechnung” in German) every year, showing the actual expenses compared with the advance payments that you made each month. Since many ancillary costs are variable, you may have paid too much or too little. Here’s an example:
Let’s say your rental contract estimates €150 each month as your share of the operating costs. This means that in one year, you’ll pay €1,800 (12 x €150) in advance. However, the annual statement shows a total of €1,920. That means you have to pay an extra €120 (€1,920 - €1,800 = €120). However, it’s also possible that the total amount on the annual statement is €1,740. In this case, you paid too much and you’ll receive a credit of €60 (€1,740 - €1,800 = €-60) from your landlord.
What if you’ve been especially frugal this year and are wondering why you still have to pay more? That’s probably because of how it’s calculated.
How landlords calculate ancillary costs
What annoys many people when it comes to rent and ancillary costs is that the estimate is just that: an estimate. For example, if the insurance company increases the building insurance premium unexpectedly, the tenants of that building will then pay more. This also applies if the total water consumption increases, or if the waste management costs go up. Because the operating costs are shared among all the building’s tenants, how high the respective payments are depends on the number of tenants and the number of square meters each tenant has.
Let’s say you live in a six-unit house. The additional costs are therefore divided by six. However, the apartments are different sizes. For example, if your neighbor has a 60m² apartment and you only have a 40m² apartment, you pay less. It doesn't matter if you use the elevator more than your neighbor or do your best to reduce your water consumption. The size of the apartment is the deciding factor — with one important exception!
Which ancillary costs are calculated per tenant?
If you pay for hot water and heating with your ancillary costs — in other words, if your ancillary costs are “warm” — your individual consumption will also be calculated. That’s why you’ll also receive a copy of the bill from the supplier or meter-reading service with your annual statement.
Which ancillary costs do you have to pay?
As we said before, you pay an amount as part of your monthly rent that goes toward your annual ancillary costs. This means that you pay ancillary costs in advance each month, but the actual costs are calculated once per year. Therefore, at some point in 2023, you’ll receive a statement with all the costs from 2022. This shows whether you get a credit or have an outstanding amount to pay. By the way, it’s worth taking this expense into account in your household budget — you might have an additional payment to make each year.
One more important thing: Landlords must create and send you the annual statement of ancillary costs within twelve months. If you don’t receive the statement in time, you’re not obligated to pay anything extra.
Ancillary cost repayment deadline
Have you received your annual statement already? If you have to make an additional payment, you’ll have 30 days to do so. The same deadline applies to your landlord if they need to send you a refund. However, if you find an issue with the annual statement, you can file a complaint and request to review your landlord’s invoices. This doesn’t mean that the deadline for paying ancillary costs is extended, though. Therefore, you should check the costs as soon as you receive the statement and then transfer the money as soon as possible so that you don’t forget. (If you’re cutting it close, you can always send a Moneybeam transfer!)
Ancillary costs: average per square meter
It’s difficult to say how high ancillary costs are on average. As we covered already, these are calculated based on the number of tenants and the size of your apartment. That said, there are also price differences between apartments and houses. In general, the costs for a house are a lot higher than for an apartment, and this also applies to house purchases. The following table gives you a very general overview of what you might expect:
Type of ancillary cost
Cost per month
Average cost per square meter
Average cost for a 30m² apartment for one person
Average cost for a 80m² apartment
Average cost for a 140m² single-family home
€510 - 700
According to a SPIEGEL survey, the average ancillary costs per square meter could increase to €6.40 in 2023. For comparison, according to the operating costs index of the German Tenants Association, they were €2.17 in 2018.
How high is the annual back payment for ancillary costs normally?
Again, it’s hard to say. Extreme situations, like the energy prices we’re seeing currently, can drive up costs, but back payments are usually in the three-digit range. Either way, it makes sense to create an emergency fund so that you’ll be prepared for your annual back payments.
Ancillary costs: tax savings for landlords
Do you own property that you rent out? If so, you’ll incur costs that can be passed on to your tenants — and the costs you can’t pass on can be claimed on your tax returns to save you some money. To learn more, read our guide on how to do your tax declaration and what you can deduct from your taxes.
How much can ancillary costs be increased at a time?
Whether your building insurance is becoming more expensive, heating costs are on the rise, or your building caretaker is asking for a pay raise, the amount of ancillary costs can change dramatically — and quickly. To avoid high additional payments (on both sides), the landlord is allowed to adjust the advance payment for ancillary costs, according to Section 560 (4) of the German Civil Code. Your landlord has to notify you in writing of the adjustment.
So, how much can your landlord adjust your advance payments? The calculation of any increase is based on the previous year’s annual statement. For example, if the costs were higher than expected last year, the landlord can increase the monthly ancillary payment for this year. To do this, they’ll calculate the difference and divide the total by 12. Suppose you paid €150 in ancillary costs per month last year, and now you have to make an additional back payment of €300. Your landlord could increase the additional costs by an extra €25 each month (€300 ÷ 12 months = €25), bringing your monthly payments up to €175 this year.
The same applies if you’re owed a credit — unless your landlord can guarantee that the costs will increase the following year. It’s important that this increase is calculated in proportion to your normal bill. Therefore, you should always check the difference in ancillary costs to see if your monthly increase actually makes sense. If you’re unsure, you can get advice from a Tenant Protection Association — membership is usually affordable and a good investment for renters.
Tip: Use our budget calculator to find out what increased ancillary costs would mean for your budget!
How often can landlords raise your ancillary costs?
Adjustments can only be made once a year, after the ancillary cost statement has been issued for the previous year. Then, your landlord can make an adjustment if it seems that the operating costs will increase in the following year. If you want to increase your ancillary costs advance payment, you can reach an agreement with your landlord.
Tip: If your landlord doesn’t agree to raising your advance payment (maybe because it creates extra paperwork for them), simply create a designated sub-account with Spaces and automatically save each month. This way, you won’t be tempted to spend money that you might later need to settle up your costs. Moving in with your partner? Manage your money together with Shared Spaces.
How much of your damage deposit can your landlord withhold for ancillary costs?
When you move out, landlords are allowed to hang on to a portion of your damage deposit in case there’s a back payment needed later for ancillary costs. According to a German court decision, the withheld amount can be equal to what you paid monthly toward your ancillary costs, but the landlord can only keep it for a few months.
What can you do if your ancillary costs are too high?
Many tenants struggle to pay their ancillary costs, even if they’re doing what they can to save on energy. This is particularly difficult for people who aren’t able to switch energy suppliers, for example. If this is you, there’s help available, though. In addition to the measures currently being taken by the federal government, you have the option to get legal advice from a Tenant Protection Association. For example, the increase to your ancillary costs might be illegal, which means you can appeal it in court. If your ancillary costs are too high, you can also ask your landlord if you can pay in installments. Plus, with the housing benefit reform in 2023, monthly support will increase from an average of €180 to around €370. You can find out whether you’re eligible for housing benefits using the housing benefit calculator from the Federal Ministry of Housing, Urban Development, and Building.
How long can the job center claim ancillary costs back from you?
People receiving social welfare benefits don’t have to pay rent themselves, but get support from the state. But what happens if you receive a credit for your annual ancillary costs? If you earn some income and are paying part of the rent yourself, you’re entitled to a repayment that’s in line with how much you’ve been co-paying for the entire year. However, if you’re completely dependent on government support, any ancillary cost credit might not belong to you, and the job center can claim it back within a four-year period.
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