Deposit and operating costs: what may be charged and when the statement is due

A teacher lets the two-room flat she inherited for €850 net rent plus €180 in advance payments towards service charges. The lease demands a deposit of €3,090, payable when the keys are handed over. She sends the statement for 2024 in January 2026 and asks for €380 more. The tenant pays nothing, and is right not to. Two clauses, two mistakes, both readable in the statute.

The deposit: ceiling and instalments

Whether a tenant must provide security at all is a matter for the lease. The statute does not require a deposit, it only limits one. A private landlord who wants a deposit must therefore agree it expressly. Without a clause in the lease there is no claim to one, not even later on.

Where security has been agreed, § 551(1) BGB caps it at three times the monthly rent. The relevant rent excludes operating costs shown as a flat rate or as advance payments. The calculation therefore uses the net rent, not the gross rent that appears on the bank statement.

The statute speaks of the security, not of any particular form. The ceiling therefore applies to what the tenant provides as security, not only to a savings account. Interest earned on an invested deposit does not count: under subsection (3) it increases the security, and the ceiling is expressly subject to that rule.

Where the security is a sum of money, the tenant may pay it in three equal monthly instalments (§ 551(2) BGB). The first falls due at the start of the tenancy, the other two together with the rent payments that immediately follow. A clause demanding the whole sum at key handover departs from this rule.

Such departures do not hold. Under § 551(4) BGB, an agreement that deviates to the tenant's detriment is invalid. The landlord can rely neither on a higher sum nor on immediate payment in full. What the statute allows is what applies, regardless of what was signed.

If the tenant does not pay the deposit, the landlord has a sharp remedy. Under § 569(2a) BGB, there is good cause for termination without notice if the tenant is in arrears with the security in an amount equal to two months' rent. Here too, operating costs shown separately are left out of the monthly rent.

No remedial period or warning is required in this case. A landlord who demanded an excessive deposit, however, can derive nothing from arrears on the inadmissible part: only what § 551 permits is owed. The calculation therefore always starts with the correct ceiling and the correct due dates of the instalments.

Investing and returning the deposit

A cash deposit does not belong in the landlord's current account. § 551(3) BGB requires it to be placed with a credit institution at the interest rate customary for savings deposits with a three-month notice period. The parties may agree another form of investment, such as a fund, but the default remains the savings deposit.

In both cases the investment must be kept separate from the landlord's assets. This is more than bookkeeping: separation protects the tenant's money if the landlord's creditors seize his accounts. A landlord who mixes the deposit with his own money breaches a duty arising from the tenancy.

The returns belong to the tenant and increase the security. The landlord may not keep the interest; he must add it to the deposit. Only for accommodation in a student or youth hostel is there no duty to pay interest. That exception does not extend to an ordinary rented flat.

The deposit secures claims arising from the tenancy, typically unpaid rent, balances due under statements and damage to the flat. For damage, speed matters. Under § 548(1) BGB, the landlord's claims for alterations or deterioration of the property become time-barred after six months, counted from the day he gets the flat back.

That is a short period compared with ordinary limitation. A landlord who finds damage on return should therefore document it, put a figure on it and assert it at once. A handover record signed by both sides is the key evidence, both for the condition at move-in and for the condition at move-out.

The same span applies the other way round. Under § 548(2) BGB, the tenant's claims for reimbursement of expenses or for permission to remove a fixture also become time-barred after six months, but counted from the end of the tenancy. How deposit and service charges are taxed is covered in the course on rental income.

Which costs count as operating costs

The tenant also bears service charges only where this has been agreed. § 556(1) BGB lets the parties shift operating costs onto the tenant. Without such a clause, they are covered by the rent. An all-inclusive rent is permitted; it simply leaves the whole cost risk with the landlord.

The statute defines operating costs narrowly. They are the costs that arise for the owner on an ongoing basis from ownership of the land or from the intended use of the building, outbuildings, facilities and grounds. The key word is ongoing: one-off outlays are excluded, recurring ones are not.

For the list, § 556(1) sentence 3 BGB refers to the Operating Costs Ordinance of 25 November 2003. Its § 1(2) expressly excludes two groups. Management costs, meaning property management, supervision and the landlord's own administrative work, are not operating costs. Nor are the costs of maintenance and repair.

This second boundary matters most in practice. Replacing a faulty heating pump remedies a defect caused by wear, and that is repair. Routine servicing of the same system, by contrast, belongs to running the heating. The tradesman's invoice therefore has to be split according to what it pays for.

The ordinance offers one relief to the landlord who does the work himself. Under § 1(1) sentence 2 BetrKV, he may charge his own goods and labour at the amount a third party, such as a contractor, could charge for equivalent work. He may not, however, add the VAT that the third party would have charged.

§ 2 BetrKV lists operating costs in seventeen items. The first covers ongoing public charges on the land, in particular property tax. Then come water, drainage, heating and hot water, the lift, street cleaning and refuse collection, building cleaning and pest control, and garden upkeep.

• Items 11 to 13: lighting of common areas, chimney sweeping, property and liability insurance of the building
• Item 14: the caretaker, insofar as he does not carry out maintenance, decorative repairs or management
• Item 15: aerial and distribution systems, with transitional rules for older installations
• Item 16: laundry facilities
• Item 17: other operating costs within the meaning of § 1 that are not covered by items 1 to 16

The catch-all in item 17 is no blank cheque. It captures only costs that meet the definition in § 1, meaning they recur and are neither management nor maintenance. A landlord who wants to pass on such an item should name it expressly in the lease so the tenant knows what to expect.

The rules on broadband have changed. Under item 15, usage fees for third-party aerials and the ongoing basic fees for broadband connections could be passed on only until 30 June 2024. A fibre distribution system inside the building follows its own rule with a provision fee, which § 556(3a) BGB limits further.

Flat rate or advance payment, and the allocation key

Once it is agreed that the tenant bears operating costs, the form must be chosen. § 556(2) BGB allows either a flat rate or advance payments. A flat rate is a fixed amount with no statement. If costs rise, the landlord bears the difference; if they fall, he keeps the surplus.

Advance payments are the norm. The tenant pays a monthly instalment, and a statement follows after the year. Advance payments may only be agreed at a reasonable level. Too low an amount is lawful but leaves the tenant with an unwelcome balance to pay; one that is clearly too high breaches the statute.

The allocation key is governed by § 556a BGB. Unless otherwise agreed, operating costs are allocated by share of floor area. Costs that depend on recorded consumption or recorded causation, by contrast, must be allocated on a basis that reflects those differences.

The landlord may unilaterally switch an agreed key to consumption-based allocation. He does so by a declaration in text form, and only before the start of an accounting period (§ 556a(2) BGB). If the costs were previously included in the rent, the rent must be reduced accordingly.

A practical special rule applies to a let owner-occupied flat in a condominium. Unless otherwise agreed, costs are allocated on the key that applies between the unit owners (§ 556a(3) BGB). The landlord can therefore adopt the split from the owners' association statement, provided that key is not inequitable.

The statement: annual, time-limited, documented

Advance payments must be accounted for annually, and the principle of economy applies (§ 556(3) sentence 1 BGB). The landlord may pass on only costs that arise under proper management. A caretaker contract far above market price or needlessly expensive insurance will count against him in a dispute.

The statement must reach the tenant no later than the end of the twelfth month after the end of the accounting period. For calendar year 2025, the deadline expires on 31 December 2026. What counts is receipt by the tenant, not the date on the letter or the day it was posted.

Missing the deadline is costly. Once it has passed, the landlord can no longer claim any additional payment, unless he is not responsible for the delay. A landlord waiting for the owners' association statement should chase it early and keep a record, so that he can prove the delay was not his fault.

The landlord is not obliged to issue partial statements. He may wait until all receipts are in, as long as he meets the annual deadline. If, however, he sends a statement with an invoice missing, he risks being unable to claim the missing amount after the deadline.

The tenant has a deadline too. He must raise objections to the statement no later than the end of the twelfth month after receiving it. After that he can no longer raise objections, unless he is not responsible for the delay. As a rule, every statement is therefore settled within two years.

To check it, the tenant may see the receipts. On request, the landlord must allow inspection of the documents underlying the statement (§ 556(4) BGB). He may provide them electronically, for example as scans. That saves an appointment, but it does not replace a complete set of documents.

Rent follows its own rhythm. Under § 556b(1) BGB, it is payable at the start of each period by which it is measured, at the latest by the third working day. For a monthly rent, that is the third working day. § 556b(2) BGB limits, in the tenant's favour, clauses that prevent him from setting off counterclaims.