Overpaying for utilities? The 3 most common mistakes in commercial properties
Reclaim excess service charges: Learn why management fees and repairs are often billed incorrectly and how you can defend yourself against this.
The service charge statement is often prone to errors in commercial tenancy law, as there is extensive freedom of contract. Common sources of error include the impermissible allocation of vacancy costs to the remaining tenants, as well as the mixing of allocable maintenance costs with non-allocable repairs. Important for you: What is not explicitly stated in the rental agreement cannot be charged. You also have the legal right to demand inspection of the original documents at any time.
The Underestimated Cost Trap
For many entrepreneurs, looking at the annual service charge statement is an annoyance that is quickly dealt with: a quick check of the total sum, a sigh over rising energy prices, and then the additional payment is transferred. After all, one doesn't want trouble with the landlord, and there's often no time for a detailed review in daily business.
Precisely this negligence can cost you several thousand Swiss francs every year. Unlike residential tenancy law, where tenant protection is very strict, commercial tenancy in Switzerland is largely governed by freedom of contract. This often leads landlords to try to pass on cost blocks to tenants that are actually the owner's responsibility. Without a detailed comparison with your rental agreement, however, the statement is little more than a non-binding cost estimate.
Advance Payment vs. Flat Rate
Before you delve into the details, you need to clarify what was contractually agreed. With a flat rate, everything is covered by the monthly amount. The landlord cannot demand any additional payment, even if oil prices skyrocket – but you also won't get anything back if the winter was mild.
Most commercial contracts, however, are based on advance payments. You make a prepayment, and at the end of the period, the actual costs are settled. This is where the risk lies: if the advance payments were set too low to make the rent appear optically cheap, a rude awakening threatens at the end of the year. It is crucial here that the landlord must prove that the costs were actually incurred.
The Three Most Common Errors in Commercial Billing
When reviewing your statement, you should focus on the following three items. Experience shows that most errors occur here to the detriment of the tenant.
Vacancy: Are you paying for your neighbour? This is a classic in office buildings or business parks that are not fully leased. Costs for heating, caretaker services, or general electricity are incurred for the entire building. However, if 30 percent of the space is vacant, the landlord cannot simply pass these costs on to the remaining 70 percent of the tenants. Costs attributable to vacant space are the owner's responsibility. They bear the vacancy risk, not you. Therefore, carefully check the distribution key. If the total costs are divided by the rented area instead of the total area, you are paying too much.
Maintenance vs. Repair: The lines often blur here intentionally. Generally, operating costs (allocable) are costs incurred through ongoing use, such as service contracts, maintenance, cleaning, or the chimney sweep. Repair costs (non-allocable) are repairs and replacements to preserve the value of the property. A concrete example: The maintenance contract for the elevator is allocable. However, if the elevator motor is defective and needs to be replaced, that is a repair. The landlord must pay for this. Many statements include lump sums under "Elevator" or "Heating" that contain both. It's worth taking a close look here.
The Administration Fee: In commercial settings, it is common for the landlord to charge a fee for preparing the statement and managing the property. However, this is only permissible if explicitly agreed upon in the rental agreement. If this clause is missing, the administration fee is already included in the net rent, if applicable. Furthermore, the amount must be reasonable – typical rates in Switzerland are between 3 and 4 percent of the allocable service charges, but higher lump sums are often applied.
The Collective Item "Miscellaneous"
Be suspicious of items like "Miscellaneous," "General," or "Other operating costs." According to Swiss tenancy law (Art. 257a OR), the tenant is only liable for service charges that are clearly and precisely specified in the contract. A general collective item is often opaque and legally unsustainable. If you cannot discern what the money was spent on, you generally do not have to pay it.
Your Right: Inspection of Documents
An Excel spreadsheet from the landlord is not proof. The law provides you with a powerful tool: the right to inspect documents. According to Art. 257b OR, you have the right to inspect the original documents.
You do not have to blindly trust the landlord. If an item (e.g., unusually high caretaker costs or repairs to the ventilation) seems disproportionate to you, request copies of the corresponding invoices. Often, just announcing a detailed document review is enough to receive corrected statements.
Conclusion: Trust is Good, Control Saves Budget
The service charge statement is not an unchangeable fact but a billing statement that can and often does contain errors. Take the time to compare the statement line by line with your rental agreement. Pay particular attention to the distribution key for vacancies and the differentiation of repairs. In case of doubt, it is worthwhile consulting an expert or real estate trustee, because over the term of a ten-year lease, these small errors add up to significant amounts.