Utility Costs: “What do I really have to pay?”

Jürg Zulliger

This particular case is especially extreme: Two tenants in a new housing complex in the canton of Schaffhausen had always paid their bills on time—both their rent and the usual advance payment deductions for their utilities. “But when we had to pay an additional 2,000 francs for the first year on top of the usual monthly utility bill throughout the year, that’s when we felt like we’d had it,” says one tenant. In order to defend themselves against and demand retribution for the high utility bill, they and other tenants in the same building all got together to compare their statements, contracts and service agreements. Thanks to their action, their landlord met them at least partway after a long legal battle.

“Utility Charges: On the Rise”

According to Fabian Gloor, Tenants’ Association attorney, this is not an isolated case: “Utilities costs have been increasing for the past several years.” There are many reasons for this: Many new buildings are technically more sophisticated than in the past and are equipped with an increasing number of devices and systems (household appliances, innovative energy and heating technology, ventilation, building automation systems, elevators, etc.). From the landlord’s perspective, often the easiest solution is simply to set up a comprehensive service contract for all the systems.

This means that building management only has to deal with a single, “stress-free payment package.” When utility costs sometimes spike, they are just passed on as utility costs. Other reasons for rising utility costs are generally increasing demands for building upgrades and amenities as well as the tendency to bury as many of these items as possible in the utility costs. This makes the base rent look somewhat more attractive, but the total utility costs will actually be higher than they first appear.

There just isn’t any simple rule of thumb for figuring out which utilities charges are justified in which amounts, says Gloor: “How buildings are used, what they are equipped with and how much of the utilities the building occupants use each month varies so much from building to building that there is no one-size-fits-all answer.” Tenants should inquire in advance (ask neighbors or ask for written information from building management) to avoid any unpleasant surprises when it comes to paying utilities costs. There are two main principles to keep in mind:

• Tenants have the right to request access to all documents, statements and records. Are the additional costs disproportionately high? Or do they tend to rise and fall? If that happens, then you should demand accountability or seek legal advice.
• According to a federal court ruling, estimated advance payments do not mean that  conclusions can be drawn on actual utility costs. This means: Even hefty additional payments of 30 percent or more are permissible per se. Tip: Check in advance whether high back-payments might be a likelihood.

Utility Costs: The bottom line on estimated advance payments

In reality, the situation in the housing market plays a role as well. It cannot be proved in individual cases, but it is conceivable that: Landlords located in areas where there are high vacancy rates are going to make renting from them appear as attractive as possible and will often therefore lower the estimated advance payment amounts. In any case, some tenants might not sign a lease agreement if they knew the true utilities charges in advance!

The usual billing period is 1 July to 30 June the following year. The tenant pays regular estimated payments during the first half of the year and then usually pays the actual amounts incurred during the second half of the year. Because more and more services and service contracts are being lumped together under the heading of utility charges, it is difficult to keep up with understanding just what one is being billed for.

Permitted utility and service costs

• Heating costs and hot water (purchase of energy)
• Utility service subscriptions for heating or elevator usage (service, not repairs or installing spare parts)
• Sewage
• Rubbish
• Building superintendent
• Stairwell cleaning
• General power
• Washing machine (only electricity and water consumption)
• Fees for TV or cable connection
• Snow removal
• Building management costs and fees

However, tenants are not allowed to be billed for repairs, spare parts, investments, renovations or building insurance premiums.

Utility and Service Costs: Constant new questions

The cost situation is constantly changing due to ongoing innovations in building equipment and technology. Some building managers and, to a certain extent, rental law specialists are breaking new ground with photovoltaic systems (solar cells), for example. These costs may be partly reported as utility charges since they are incurred as part of operating, billing and managing a community for the purpose of self-consumption. “The topic is becoming increasingly technical and complex,” states attorney Fabian Gloor.

Basically, however, only those utility costs that are explicitly listed in the contract are the ones that can be charged. Vague names for utility charges and regulations such as “other utility costs” or “general expenses” are not permitted. The landlord would only be able to charge for additional items if he first amended the original contract. The contract amendment must be carried out properly using the official form and must be in compliance with statutory deadlines (on the next termination date).

Conclusion: Tenants have the right to inform themselves in advance. All the various items for which the tenant will be charged must be listed on the contract. And in case of doubt, the tenant has the right to demand access to pertinent documents and statements.

Utility Costs: Tips, leaflets and courses

Tips from the Tenants’ Association
Courses offered: Tenancy law, utility costs, etc...
Information and courses offered by the Homeowners Association