Rental charges vs rent: legal distinction in a tenancy agreement

A landlord cannot decide what to rebill. The list of charges recoverable from the tenant is set by decree, and it is exhaustive: whatever is not included remains payable by the landlord, regardless of how the lease is worded. This simple rule nevertheless generates most rental disputes, because it runs up against a persistent intuition — the idea that any expense linked to the property should be passed on.

Two sums of a different nature

Rent is the consideration for making the property available. It is freely set on re-letting, except in rent-controlled areas, and it does not need to be justified.

Rental charges, also known as recoverable charges, are the reimbursement of expenses the landlord has advanced on the tenant's behalf. They are not income: they must be justified, itemised and reconciled. Confusing the two is the first mistake, and it has a direct consequence — a sum claimed as charges that cannot be justified is not owed.

Three categories, and nothing else

The decree setting out the list identifies three families of recoverable expenses:

• Services provided to the tenant. Cold and hot water, communal heating, electricity for common areas, the lift.
• Routine maintenance costs and minor repairs to common areas and shared equipment. The key concept is maintenance, as opposed to replacement.
• Taxes corresponding to services from which the tenant benefits. The household waste collection tax is the typical example.

The dividing line almost always plays out in the second category, and it runs as follows: maintaining is recoverable, replacing is not. The boiler maintenance contract is recoverable; a new boiler is not. Cleaning of common areas is recoverable; refurbishing the façade is not.

What is never recoverable

Four items consistently come up in disputed statements, and none of them is recoverable:

• Major works and the replacement of equipment, even where they improve the tenant's comfort.
• Management fees paid to a property manager or agency.
• Legal costs incurred by the landlord, including proceedings against the tenant themselves.
• Insurance premiums taken out by the landlord, particularly non-occupier landlord insurance.

Any lease clause providing otherwise is deemed unwritten. The lease cannot broaden a list that the decree intended to be exhaustive.

Advance payments, reconciliation and flat-rate charges

The normal arrangement is one of monthly advance payments followed by an annual reconciliation. Reconciliation is not optional: it is mandatory, and it requires the landlord to provide the tenant with a statement broken down by type of charge, along with the method used to apportion costs between units.

The landlord must keep supporting documents available to the tenant for six months from the date the statement is sent. This availability requirement is the linchpin of the system: without accessible supporting documents, the sum claimed becomes indefensible. Organising this record-keeping by financial year and by unit is part of the routines described in our property management guide.

Two mechanisms protect the tenant against accumulated charges:

• Where reconciliation has not been carried out before the end of the calendar year following the one in which the charges fell due, the tenant may request to spread payment over twelve months.
• Sums wrongly received, like sums left unpaid, are time-barred after three years.

The flat-rate charge is the other available arrangement. It is permitted for furnished lettings and flat-shares. Its amount must be set at a reasonable level in view of actual charges, and in this case there is neither reconciliation nor supporting documents to provide — but nor can it be adjusted on the grounds that actual charges exceeded the flat rate. It is a trade-off between simplicity and flexibility, to be settled when drafting the lease rather than during its performance.

The case of commercial leases

The regime is entirely different, and a landlord managing both cannot reason by analogy.

In commercial matters, there is no exhaustive list of recoverable charges. The principle is one of contractual freedom, but it is regulated: the lease must include a precise and exhaustive inventory of the categories of charges, taxes, levies and fees linked to the lease, indicating how they are apportioned between landlord and tenant. Certain expenses cannot be passed on to the tenant, in particular major repairs within the meaning of the Code civil and compliance works falling within the scope of such major repairs.

The landlord must also provide a forecast statement of works and a summary statement of works carried out. The absence of an inventory in the lease does not render the contract void, but it does prevent the landlord from rebilling.

Usage scenarios

Moving in. The amount of advance payments must be set based on the last actual statement, and not simply copied from the previous tenant if consumption levels have changed. A significantly underestimated advance payment leads to a heavy reconciliation bill, which is likely to be disputed.

Annual reconciliation. The statement must be sent with a breakdown by type of charge. Keeping proof of when it was sent avoids having to prove, two years later, that it was indeed sent.

Tenant's departure. The effective date of notice, the details of which are set out in our article on lease termination, marks the boundary of the period of charges to be reconciled. Charges not yet reconciled cannot freely be offset against the security deposit: its return follows its own timeframes, and an unjustified deduction exposes the landlord to late-payment penalties calculated per month started.

Frequently asked questions

Can the landlord recover property tax? No, with the exception of the household waste collection tax, which corresponds to a service the tenant benefits from. The rest of the property tax remains payable by the landlord.

Can a lease clause add recoverable charges? No, for residential lettings: the list set by decree is exhaustive, and any clause to the contrary is deemed unwritten. In commercial leases, the logic is reversed — it is the inventory set out in the lease that defines what can be rebilled.

What can be done if the landlord never reconciles the charges? The tenant can demand reconciliation and, where it takes place late, request that payment be spread over twelve months. The sums concerned are time-barred after three years.

Can the tenant demand to see the invoices? They can consult the supporting documents, which the landlord must keep available for six months after the statement is sent. This right of consultation is not limited to the overall statement: it extends to the supporting documents themselves.

Is replacing a boiler recoverable? No. The maintenance contract is recoverable, replacing the equipment is not. The dividing line lies between maintaining and replacing, not between necessary and superfluous.

Can the flat-rate charge be revised? It changes according to the terms set out in the lease, but it cannot be topped up on the grounds that actual charges turned out to be higher. This is the trade-off for there being no reconciliation and no supporting documents.

Key takeaways

The rule can be summed up in one sentence: for residential lettings, the list of recoverable charges is set by decree and is exhaustive, and the lease cannot broaden it. Everything else follows from this — maintenance is recoverable, replacement is not; management fees, the landlord's insurance and legal costs are never rebillable.

In practical terms, two obligations determine the outcome of a dispute: reconciling charges every year by providing a detailed statement, and keeping supporting documents available for six months. A landlord who does both and keeps dated records of having done so wins disputes. One who claims advance payments without ever reconciling them loses, even when the sums were genuinely owed.