How to settle running costs?

What are running costs?

When browsing rental listings, we quickly find that the rent stated in the advertisement is somewhat misleading. After all, we have to add the monthly bills to it, that is, the running costs. They cover all charges other than the rent itself, namely: bills for gas, electricity, water, heating and (if it comes with the flat) internet, as well as the service charge owed to the housing cooperative.

The level of running costs depends on monthly utility consumption – which is why rental advertisements and the agreement itself often give only an estimated figure. Under the Act on the Protection of Tenants' Rights, the burden of these costs always falls on the tenant. However, how the tenant settles the bills remains a matter to be agreed with the owner of the flat.

How will we settle utility charges?

Flat owners take different approaches to running costs – some want to keep full control over them, while others are willing to trust us with settling them.

Advance payment towards charges

Both landlords and tenants are very happy to opt for this form of settling running costs. In this case, the occupant of the flat pays an advance together with the monthly rent – its amount is fixed and specified in the tenancy agreement (based on the landlord's experience or the suggestion of an estate agent). Of course, the actual utility costs do not have to match the amount of the advance; we then have an overpayment or an underpayment, which the flat owner should settle with us from time to time (every six months or every year).

Settling utility charges through advances is very safe for the property owner – they do not have to cover the cost of consumption (unless it exceeds the advance), and at the same time they can be sure the bills will actually be paid. And what about us? We simply have to add the advance to the rent transfer each month, without worrying about what the utility costs actually are.

The owner pays the bills and settles them with the tenant

Another method of settlement, which also leaves the landlord in full control of the bills, is for the landlord to pay the running costs personally and then settle them with the occupant. The problem with this solution is that the owner has to cover the cost of consumption out of their own pocket – and thereby ties up their funds until they receive a transfer from us. For owners who manage several flats, this can become a burden – especially in winter.

The tenant pays the bills

The landlord also has the right to transfer full responsibility for settling the bills to the tenant. In this case, it is we who will have to make the transfers to the utility providers and the housing cooperative, and also make sure they are made on time. It might seem a very convenient solution from the flat owner's perspective, but not very advantageous for us. In practice, even owners themselves rarely opt for it. They cannot be sure that their tenants really pay the charges on time, and if problems arise, it is on them that the duty to pay the arrears will fall.