How does the annual operating cost statement work?
We record all income and expenditure, allocate it and produce a clear, documented statement for owners and tenants.
How the annual operating cost statement works
The operating cost statement is one of the most important duties of a property management company. It shows transparently which costs have arisen over the year and how they are allocated to the individual units. A sound statement creates trust and avoids conflict between owners and tenants.
The process step by step
A correct statement is not produced at the end of the year but prepared throughout it:
- ongoing recording of all income and expenditure for the property
- allocation of costs to the correct items
- distribution to the units according to the agreed key
- preparation of a breakdown that owners and tenants can follow
- sending out and explaining the statement
Which costs are included
Operating costs typically include items such as water, drainage, refuse, building services, insurance and communal electricity. Which costs may be passed on is governed by law and by contract. We make sure only permissible items are allocated, and report reserves separately; more on that in the article on the maintenance reserve fund.
Common sources of error
Typical mistakes are incorrect allocation keys, items that may not be passed on, or missing receipts. Such mistakes lead to justified objections and in the end cost everyone involved time and patience. We check every item carefully, so that the statement holds up from the start and does not have to be corrected afterwards.
A statement is good when the person receiving it understands it without having to ask.
When the statement arrives
The operating cost statement is usually produced once a year for the calendar year just ended. Depending on the property and what has been agreed, owners and tenants receive their statement within the statutory deadlines. We keep to those deadlines and let you know in good time if there is a credit or an amount to pay.
Credits and additional payments
If the statement shows a credit, it is paid out or set off. If there is an amount to pay, we explain clearly how it arose, for example through higher energy costs. That keeps the statement transparent for everyone involved and avoids unnecessary queries or conflict.
Why quality counts
A faulty or unclear statement is one of the most common reasons for disputes and for changing management company. We place value on accuracy and clarity and are your fixed contact for any questions. Every item is documented and can be inspected on request. Which other duties are involved is shown in the article on the duties of a property management company.