Heating Cost Billing for Landlords: Basic Costs, Hot Water and CO2

Kevin Celentano · 2026-10-13

The metering service has delivered. In front of you is a heating cost statement with base costs, consumption units, a hot water formula and a CO2 certificate. Your tenant will read it, perhaps even more carefully than you. And if something is missing, they are allowed to reduce the amount.

Heating and hot water are the largest service charge item in most flats. According to the service charge index of the German Tenants' Association, they averaged €1.32 per square metre per month in the 2024 billing year, almost half of all service charges. For a 70 sqm flat, that's a good €1,100 a year.

This guide shows how the Heating Cost Ordinance distributes costs, how the hot water formula works and which part of the costs remains with you as the landlord. It ends with a calculation from the building's gas bill to the share of a single flat.

01Who has to distribute which heating costs and how

In a central heating system, the costs arise for the entire house. The Heating Cost Ordinance determines how they are distributed among the flats. It takes precedence over every tenancy agreement (§ 2 HeizkostenV). An exception only applies to a building with two flats, one of which the landlord occupies themselves.

Heating costs include significantly more items than just fuel. § 7 Para. 2 HeizkostenV lists them.

The last line in particular leads to disputes. A heating contractor's bill often contains maintenance and repair at the same time. Only the maintenance part belongs in the heating costs; you bear the rest yourself.

02Base costs and consumption costs: the 50/70 rule

Heating costs are divided into two parts. One part follows the measured consumption of each flat, the other the area. The area share is called base costs. It covers the fact that a building also loses heat when no one is heating, for example via pipes and the stairwell.

The consumption share must be at least 50% and may be at most 70% (§ 7 Para. 1 HeizkostenV, for hot water § 8 Para. 1). As the building owner, you decide which rate to choose (§ 6 Para. 4 HeizkostenV). For condominiums, the owners' association decides this.

The formula for heating a flat looks like this:

You are not allowed to change the key at will. This is permitted after structural measures that permanently save heating energy, upon introduction of pre-recording or for other objective reasons, and always only at the beginning of a new billing period (§ 6 Para. 4 HeizkostenV).

03Hot water: the formula from § 9 HeizkostenV

If the same system also heats the hot water, the metering service must first split the costs: what was room heat and what was hot water. Since the 2009 amendment, a heat meter has been provided for this (§ 9 Para. 2 Sentence 1 HeizkostenV). Calculation is only allowed if measurement involves unreasonably high effort.

Then this numerical value equation applies:

Q = 2.5 × V × (tw − 10)

If natural gas is billed according to gross calorific value, which is common with gas bills, Q is multiplied by 1.11. In the case of commercial heat supply, it is divided by 1.15. If neither heat quantity nor water volume can be measured, the ordinance allows a flat rate of 32 kWh per square metre of living space in exceptional cases.

The share that Q has in the building's total energy consumption is the hot water share of the costs. After that, heating and hot water are separated, each again distributed according to base and consumption costs.

04Example calculation: from the gas bill to the flat

Lena rents out a 72 sqm flat in a building with eight flats and 600 sqm of living space. The central gas heating also generates the hot water. The owners' association bills 30% by area and 70% by consumption. Lena and all figures are fictitious; the calculation is an example and not a forecast.

The heating costs for the building for 2025 are €15,000: gas, operating electricity, maintenance, metering service and equipment rental. The house has consumed 150,000 kWh of gas. 240 m³ flowed through the hot water meters at an average of 55 °C.

Now both pots are distributed among the flats. The heat cost allocators in the building count a total of 4,200 units, Lena's flat 600. Her tenant has consumed 30 m³ of hot water.

Two things stand out. Even a frugal flat contributes €540 a year via the base costs, no matter how little it is heated. And the consumption share determines how much frugal heating is rewarded. At 50% instead of 70%, the difference between frugal and wasteful flats would be significantly smaller.

05CO2 costs: which part remains with you

Since billing periods starting from 1 Jan 2023, landlords and tenants have shared the CO2 costs for heating and hot water. The benchmark is the building's CO2 emissions per square metre of living space per year. The worse the building, the more the landlord bears (§ 5 CO2KostAufG with Annex).

The table is summarised. The law has ten stages of 5 kg each; the full list is in the Annex to the CO2 Cost Allocation Act (CO2KostAufG).

For Lena's building, we assume emissions of 27.3 tonnes of CO2, which is 45.5 kg per square metre. The landlord therefore bears 70%. At a CO2 price of €55 per tonne in 2025 (§ 10 Para. 2 BEHG), the CO2 for the whole house costs €1,501.50.

Around €140 a year remains with Lena in this example. For a well-insulated new building under 12 kg per square metre, it would be zero. This is one of the reasons why the energy condition of a building belongs in the calculation when buying a rented flat.

06Reduction rights and the retrofitting deadline at the end of 2026

The Heating Cost Ordinance gives the tenant two reduction rights. Both affect you directly as a landlord, as the costs still arise.

The most important date is 31 Dec 2026. By then, all meters and heat cost allocators that are not remotely readable must be retrofitted or replaced (§ 5 Para. 3 HeizkostenV). Anyone who still has old devices in the house after that risks a 3% reduction starting with the statement for 2027.

Since 2022, tenants in buildings with remotely readable devices have also been entitled to monthly consumption information (§ 6a HeizkostenV). The metering service takes care of this, but it costs money, which in turn counts towards the heating costs.

07Special cases: change of tenant, device failure, vacancy

If a tenant moves out during the year, an interim reading is taken (§ 9b HeizkostenV). Base costs are distributed by time, consumption according to the reading. If no interim reading is possible, the metering service distributes according to degree-day figures, i.e. according to the typical heating requirement of the individual months.

If a device fails, consumption may be estimated, for example according to previous years or comparable rooms (§ 9a HeizkostenV). If this affects more than 25% of the area, distribution is only by area. Whether the tenant may then reduce the amount is disputed in individual cases.

If your flat is empty, you bear its share. Base costs continue, even if no one heats. With 72 sqm as in the example, that would be €540 a year, without a single euro of consumption.

08Risks and limits: what you should look out for

Most landlords do not calculate heating costs themselves, but take over the statement of the metering service. This is sensible, but does not relieve you of responsibility. Errors of the metering service are at your expense in relation to the tenant, and the deadline for the service charge statement also runs if the metering service delivers late.

Therefore, check three points before you pass on the heating cost statement. Does the consumption share match the resolution or your determination? Is the CO2 share shown and deducted from the tenant's share? Are repairs excluded from the heating costs?

09Read on

• Creating a service charge statement: step by step
• Recoverable service charges according to BetrKV
• Energy certificate for landlords
• Service charge (Hausgeld) for condominiums
• Glossary: Warm rent
• Glossary: Recoverable service charges

10Sources

Legal texts retrieved on 29 Sept 2026, § 6, § 7 and § 9 HeizkostenV as well as the service charge index on 13 Oct 2026.

• Heating Cost Ordinance (§§ 2, 5, 6, 6a, 7, 8, 9, 9a, 9b, 12)
• § 9 HeizkostenV (Allocation for connected systems, hot water formula)
• CO2 Cost Allocation Act (§§ 5, 7 with Annex)
• Fuel Emission Allowance Trading Act (§ 10 Para. 2, CO2 price 2025 and 2026)
• German Tenants' Association, Service Charge Index for the 2024 billing year
• Example calculation: own calculation, as of 13 Oct 2026

Note: This guide does not replace legal advice. It generally reflects the status of the Heating Cost Ordinance and the CO2 Cost Allocation Act on 13 Oct 2026. All figures in the example calculation are a calculation example with disclosed assumptions.