REALWorld Law

Commercial leases

Costs of utilities

How are utilities and telecommunications which serve a property occupied by several lessees paid for?

Angola

Angola

If not otherwise specified, each lessee will bear those charges and expenses related to their respective use. If it is not possible to separate out usage - due to a global provision of services - mill rate allocation rules may be applied, by usage, by area or in accordance with any other allocation criteria defined by the parties.

Australia

Australia

Tenants under commercial and retail leases tend to arrange and pay for their own utilities and telecommunications directly from the suppliers where they are able to obtain a separate connection. Otherwise, the landlord can arrange to supply the utilities and telecommunications and on-sell these services to the tenant.

Belgium

Belgium

Contracts for telecommunication services are usually concluded with each tenant individually so several separate telecommunication agreements may exist for one property. Contracts for utilities serving multiple occupiers are usually entered into by the landlord but the costs are normally transferred to the tenants by contractual agreement.

Under Flemish pop-up lease Decree nor in the Brussels Capital pop-up lease Ordinance, it is expressly stated that said costs have to be borne by the tenant in the context of a pop-up lease. Conversely no express similar provision is included in the Walloon pop-up lease Decree, which does not prevent the parties from stipulating this in their agreement.

Bosnia-Herzegovina

Bosnia-Herzegovina

Each tenant pays a proportion of the cost of utilities based on the size of their unit relative to the total size of the leased building. Telecommunications are often contracted for directly and usually paid in full by the tenant, unless specified otherwise in the lease agreement.

Canada

Canada

Tenants under commercial leases tend to arrange and pay for their own utilities and telecommunications directly from the suppliers where they are able to obtain a separate connection. Otherwise, the landlord can arrange to supply the utilities and telecommunications and provide these services to the tenant, often with an additional administrative fee.

China

China

These costs are usually included in the management fees and are paid by the lessee.

Croatia

Croatia

Charges for electricity, water etc are paid by the tenant directly to suppliers if appropriate meters have been installed in the leased premises. In larger developments or shopping centres these costs are often treated in a similar way to service costs and each tenant will pay a proportion, calculated on the basis of the size of their unit.

Czech Republic

Czech Republic

Each lessee is normally required to pay a proportion of the utility costs, calculated according to the size of the unit held.

Czech law makes a clear distinction between rent and common expenses and it is not possible to incorporate common expenses into rental charges.

Denmark

Denmark

Telecommunications are normally paid for directly by the lessee. Other utility costs are divided between the lessees in proportion to the size of their unit in relation to the total area of the building, unless it is agreed in the contract that some or all of the utility costs are not paid separately but are contained in the rent.

France

France

Under the French Civil Code, the cost of utilities and telecommunications is payable by the landlord, but the tenant will normally be given responsibility for electricity, heating, and gas supplies. If there is more than one tenant, these expenses are shared according to the terms of the relevant leases.

Germany

Germany

Contracts for telecommunication services are usually concluded with each tenant individually. In consequence, several telecommunication agreements may apply to one property. In the case of utilities serving multiple occupiers, contracts are usually concluded by the landlord and the costs are then passed on to the tenants by agreement.

Hong Kong, SAR

Hong Kong, SAR

Services such as electricity, water, gas and telecommunications services are normally subscribed to by the lessee directly with suppliers, although this may not be the case in a large development.

Hungary

Hungary

In the case of utilities serving multiple occupiers, supply contracts for utilities and telecommunications are usually entered into by the landlord with any and all costs transferred to the tenants by contractual agreement. In certain cases, however, such contracts may be entered into by each tenant directly.

Ireland

Ireland

In a standard lease, the costs related to utilities are the responsibility of the tenant. If an individual unit is not self-contained, a meter measuring the tenant's consumption is normally installed.

Italy

Italy

These costs are usually paid by tenants on the basis of their specific usage and requirements.

Japan

Japan

Residential lease

Generally, lessees are responsible for their own utilities and telecommunications services and respective payments to such service providers.

Commercial lease

The burden of utilities costs depends on the nature of the building and the lease in question.  In some cases, a lessor enters into contracts with suppliers for utilities but the actual costs are then transferred to the lessees.  In other cases, lessees enter into utilities contracts directly with suppliers.

Netherlands

Netherlands

In addition to the rent, lessees are liable for the cost of the supply, transportation, metering and usage of water and energy for the leased space, including the cost of entering into the relevant contracts and meter rental, and any penalties or fines imposed by the utility companies. Lessees enter directly into supply contracts with the relevant utilities, unless the leased property has no separate connection and/or the lessor arranges this as part of the supplies and services provided under the lease.

Nigeria

Nigeria

The lessees of property are jointly responsible for the costs of the utilities, telecommunication and services used in common on the basis of their respective consumption rates or as may be determined by the property facilities managers in agreement with the respective lessees.

The lessees’ respective consumption rates for certain utilities like electricity, water and telecommunications are subject to metering on the basis of use and consumption with payments directly to the service providers or through the lessor to the services providers.

Norway

Norway

Services such as telecommunications, electricity, water, heating, lighting, ventilation, cleaning etc. are usually agreed directly between tenants and suppliers.

Poland

Poland

Each tenant is usually required to pay a proportion of the costs incurred by the landlord for the maintenance of common utilities. The proportion payable is based on the size of the tenant's unit. Service charges usually include utilities such as electricity, water, power and telecommunications.

Portugal

Portugal

If not otherwise specified, each tenant will bear the charges and expenses related to their respective consumptions. Should it not be possible to individualize the consumptions – due to a global provision of services – mill rate allocation rules may be applied, by consumption, by area or in accordance with any other allocation criteria defined by the parties.

Romania

Romania

The parties to the lease agreement are free to decide which party will pay operational expenses (eg electricity, water, gas and other utilities).

Generally, landlords enter into agreements with the suppliers of utilities, pay the related costs and recharge the expenses to the tenant according to consumption. As an alternative, the tenants sometimes enter into the agreements directly with the suppliers of utilities.

Slovak Republic

Slovak Republic

The cost of utilities, such as energy, water, sewage etc, is generally paid by the landlord and the tenant pays proportion of these costs, calculated according to the size of the leased premises.

Spain

Spain

Contracts regarding telecommunications services are usually concluded with each tenant individually so there may be several telecommunications agreements affecting any one property. Contracts relating to utilities which serve multiple occupiers are usually agreed by the landlord, although the costs are normally transferred to the tenants by contractual agreement.

Sweden

Sweden

Services such as telecommunications, electricity, water, heating, etc are usually paid by the tenants directly to suppliers.

Thailand

Thailand

This is a contractual arrangement between the parties. Parties often allocate this responsibility so that:

  • The lessee pays any such amounts directly to the relevant government authority, or
  • The lessee pays any such amounts directly to the lessor at an agreed rate
United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

Within Abu Dhabi and outside the Abu Dhabi Global Market free zone

Services such as electricity or water are normally purchased by the lessee directly from suppliers, although this may not be the case in a large development.

Within the Abu Dhabi Global Market free zone

In the Abu Dhabi Global Market free zone, there are no regulations governing which party is to pay utility and communication costs, which means the parties are free to contract as they wish. However, the ADGM Strata Title Regulations 2015 provide for unit owners to pay such utility and telecommunication costs.

United Arab Emirates - Dubai

United Arab Emirates - Dubai

This will depend on the nature of the property. As a general rule, the property occupied by a tenant will be individually metered and the common parts will be paid for through the service charge.

UK - England and Wales UK - England and Wales

UK - England and Wales

Services such as electricity, water, gas and telecommunications services are normally purchased by the tenant direct from suppliers, although this may not be the case in a large development.

UK - Scotland

UK - Scotland

Contracts for telecommunication services are usually concluded with individual tenants. In consequence, several telecommunication agreements may exist in relation to one property. In the case of utilities serving multiple occupiers, contracts are usually concluded by the landlord and the costs transferred to tenants according to the contractual agreement.

Ukraine

Ukraine

Utilities and communications are usually paid for by the lessor. In such cases, such payments are included in the rent or paid to the lessor by the lessee separately to enable the landlord to recover the costs incurred. Certain utility payments may be made directly by lessee if parties agree so in the lease agreement.

United States

United States

Tenants of multi-tenanted properties will typically be charged for electricity either (a) directly by the electricity provider if the premises is separately metered, or (b) by the landlord based either upon their proportionate share of the landlord’s electricity bill as measured by sub-meter readings or upon a fixed electrical charge subject to adjustment if, for instance, the cost of electricity charged to the landlord or the tenant’s electrical consumption increases. How water is paid for will generally depend upon how the water is to be used – in office and most retail leases, for instance, the landlord will often pay for the cost of water for drinking and lavatory purposes. In restaurant, industrial and other leases where there is more significant water usage, the tenant will often be responsible for the cost of its actual use, measured by sub-meter where possible.

Payment of heating and air conditioning charges depends upon the type of property in question. For example, with retail leases the tenant will often be directly responsible for procuring heating and air-conditioning at its own expense. However, in the case of multi-tenanted office buildings landlords will often provide the equipment and pay for the heating and air conditioning of tenants’ premises during regular business hours (subject to reimbursement through the shared operating expenses mechanism whereby all of the tenants proportionately share the cost of maintaining and operating the common facilities) and tenants may be charged for such service provided outside of regular business hours. Tenants are generally responsible for procuring telecommunications services at their own expense.

Zimbabwe

Zimbabwe

It is subject to contractual agreement between the parties. However typically, utilities and telecommunications are the responsibility of the lessee, and are normally paid directly to the service provider by the lessee.