{"id":2660,"date":"2020-12-02T08:14:47","date_gmt":"2020-12-02T08:14:47","guid":{"rendered":"https:\/\/moderansolutions.com\/?p=2660"},"modified":"2024-12-19T21:59:05","modified_gmt":"2024-12-19T21:59:05","slug":"utilities-calculations-the-pros-and-cons-of-different-approaches","status":"publish","type":"post","link":"https:\/\/moderansolutions.com\/pl\/utilities-calculations-the-pros-and-cons-of-different-approaches\/","title":{"rendered":"Utilities calculations \u2013 the pros and cons of different approaches"},"content":{"rendered":"
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We use the term \u201cutilities costs\u201d (also called \u201cancillary costs\u201d, if we want to be technically correct) to refer to the costs that the tenant has to pay in addition to their monthly rent. These are operational costs related to the use of the rented premises.<\/span><\/p>

There are 2 types of utilities costs <\/strong><\/h4>

1. Common area maintenance (also known as CAM) and other general costs. These costs are needed in order to maintain the general operational quality of the building and commonly used spaces like corridors, elevators etc. Typical examples here include elevator maintenance, cleaning of common spaces, building security etc.<\/span><\/strong><\/p>

2. Individual utilities consumption<\/b>, e.g. electricity, gas, water. These costs are consumed directly by the tenant and nowadays usually measured by meters. Individual consumption can vary a lot depending on the tenant\u2019s business. For example, restaurants and gyms usually have high water consumption, IT-companies and grocery stores have higher electricity consumption, etc.<\/span><\/p>

All in all, there are three common approaches to calculating and invoicing<\/a> utilities costs. However, these mostly concern CAM and general costs. Individually consumed utilities are almost always metered and billed directly to tenant.<\/span><\/p>

3 different approaches to calculating utilities<\/strong><\/h4>
  1. Included in rent<\/b> – most popular with serviced spaces as well as in Asia.<\/span><\/li>
  2. Monthly fixed rate agreed for a year and balanced once at the end of the year<\/b> – a typical standard in German-speaking and other Western European countries<\/span><\/li>
  3. Monthly calculation and invoicing<\/b> – a typical standard in Eastern Europe and other countries with a less stable history of commercial relations.<\/span><\/li><\/ol>

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    The pros and cons of these approaches<\/strong><\/h4>
    1. Included in rent<\/strong><\/h5>

    Utilities included in rent are used mostly for smaller, predictable premises (offices, especially small ones), where individual utilities consumption is not high. Alternatively, this approach is also used when tenants contract directly with the utilities providers (electricity, water, gas, etc.), which is common practice for major consumers like large warehouses or production companies who have the size to negotiate their own prices.<\/span><\/p>

    Pros<\/strong><\/p>