Service charges: definition & explanation

Whether yield real estate or investment real estate, during the purchase of a house or an apartment there are always ancillary purchase costs. What many underestimate: The ongoing ancillary costs of owning a property. If you buy a rented property or do the initial letting yourself, you can pass on some of these incidental costs to the tenant.

Non-apportionable incidental costs: repair, maintenance & co.

You cannot pass on costs for craftsmen, maintenance and management to the tenant. After all, it is your responsibility as a landlord to ensure that the property meets modern safety standards and is rentable.

As the landlord, you must bear these costs yourself:

• Repair costs
• Maintenance costs
• Administrative expenses
• Bank charges

Apportionable service charges: The tenant pays

The apportionable ancillary costs are those that can be apportioned to the meter by you as the landlord. To avoid misunderstandings here, these should be agreed in the rental contract. This type of incidental costs are also called operating costs. Let’s take a closer look at them.

List of operating costs: (BetrKV) § 2

Operating costs are therefore constant ongoing public charges on the property. These are defined and regulated by law. Thus, any costs for the care and maintenance of the common areas and facilities fall into the category of apportionable service charges. Any costs for street cleaning, garbage disposal and for the chimney sweep are also paid by the tenant.

Here is a brief overview:

1. Water supply
2. Drainage
3. Heating system and fuels
4. Hot water system, supply and equipment
5. Connected heating and hot water supply systems
6. Passenger or freight elevator
7. Street cleaning and garbage disposal
8. Building cleaning and vermin control
9. Garden maintenance
10. Lighting
11. Chimney cleaning
12. Property and liability insurance
13. Janitor
14. Community antenna system
15. Facilities for laundry care
16. Other operating expenses

More about buying real estate: Operating costs

Are you buying a property that is already rented out or are you planning to rent out your newly purchased property? If you’ve never rented out a property before, you should definitely take a closer look at the different ancillary costs. Read even more on the subject here, on my new site for buyers, Immobilien-Erfahrung.de:

• Apportioning operating costs to tenants (external)

Calculate purchase price: Important factors

To calculate the purchase price depends on several factors. The location of the property, its location, as well as its year of construction are important. Once the purchase price of the property has been determined during the property valuation, the ancillary purchase costs must be added.

The final purchase price is therefore composed of

1. Purchase price of the property
2. Incidental purchase costs

Incidental purchase costs: land transfer tax, broker & Co.

Not all incidental purchase costs are the same in all federal states. Some incidental costs, such as the real estate transfer tax, differ from state to state. Sometimes it also depends on whether you are buying a house, an apartment or an apartment building. The investment strategy, i.e. income property or investment property, can also have a different effect on the ancillary purchase costs. If you also buy through a real estate agent, you will also incur a broker’s commission, which also varies by state.

Reading tip: Real estate transfer tax by federal state

So what counts as an incidental cost of purchase?

• Real estate transfer tax (3.5-6.5%)
• Notary fees (1.5%)
• Land register entry (0.5%)
• Broker commission (3.57-7.14%; 50:50 for private purchase)

in a home of one’s own in a dreamlike setting. What are the ancillary purchase costs here?

Example: Buying a house in NRW including incidental purchase costs

We will show you how these ancillary purchase costs add up to the original purchase price using this short example. Let’s assume you want to invest in a single-family home in NRW. To keep the example simple, let’s assume that after technical and commercial inspection the purchase price is 100,000 euros.

• Purchase price for house in NRW: 100,000 euros

Calculate real estate transfer tax in NRW

Depending on the federal state, the real estate transfer tax ranges from 3.5% to 6.5%. Our property is located in NRW. One look at the table and we find out: The property tax in NRW is 6.5%.

• Real estate transfer tax in NRW (6.5%): 6,500 euros

Notary costs: sealing the purchase contract

You will also incur notary fees. After all, the purchase agreement must be sealed. You can estimate this amount at 1.5% of the purchase price of the property.

• Notary fees (1.5%): 1,500 euros

Land register entry Costs: Transfer of ownership

The land transfer tax has been paid, as well as the notary? Very good! Next comes the land register entry. Here, the property you have purchased is now registered as your property. For this transfer you should calculate 0.5%.

• Land register entry (0.5%): 500 euros

Broker costs: commission & distribution

If a broker is involved, the broker’s commission is still due in the last step. It is important to note here: If it is a private real estate purchase, the broker’s commission is split 50/50 between the buyer and seller. However, if the real estate purchase is a commercial purchase (for example, on behalf of a company), then the commission and distribution are freely negotiable. The amount of the broker’s commission varies depending on the federal state. In NRW it is 3.57%.

• Brokerage commission (3.57% [3,570 / 2]): 1,785 euros

Conclusion: Purchase price and ancillary purchase costs at a glance

The actual purchase price of the property is therefore 100,000 euros. If the ancillary purchase costs are added, we are then at 110,285 euros, which must be invested in total. Our tip: Right from the start, make a concise checklist of the ancillary purchase costs that you will incur and add these to the original purchase price. This prevents any nasty surprises with regard to financing.

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Brokerage commission: costs and breakdown

If a real estate agent is involved in your real estate purchase, costs will be incurred. These are called broker’s commission. The amount of the commission depends on the amount of the purchase price as well as on the federal state. For private purchases, the broker’s commission is split 50/50 between the buyer and seller. For commercial purchases, this division is individually negotiable.

• Private purchase: 50/50 between buyer and seller
• Commercial purchase: Freely negotiable

Fees by state: Table

Depending on the state in which the property is located, different fees are due. In principle, you can expect a brokerage commission between 3.57% and 7.14%.

Brokerage commission: 3,57% – 7,14%

So for private purchases, these values apply:

Buying real estate: Learning from A-Z

Here you will find everything you need to know for your real estate purchase from A-Z: owner-occupancy or rental, financing a condominium, apartment search, real estate portals, brokers, valuation, purchase prices, negotiations and taxes. Knowledge and experience from experts, in one guide.

✓ A guidebook
✓ All facts
✓ Insider tips
✓ Purchase checklists

Learn step-by-step the home buying process and lots of insider tips!

• Buy apartment