Heating and hot water costs are a very important factor within operating costs of housing units. Under the German rental law, the landlord can recover these costs to the tenants. In order to do this, the landlord must install devices for measuring the energy consumption for heating and hot water of tenants in each housing unit. Other criteria for allocating the costs to tenants apart from metering energy consumption are not allowed under the German law.

Once in a year, the landlord is obliged to send to the tenant an operating cost statement listing all operating costs recovered from him in the previous year. For the landlord, it is important to decide whether to measure the tenants’ energy consumption internally or via an external metering company (make or buy decision). The fees of external metering companies are rather high. The reason for the high fees is that only a few large metering companies dominate the German market which leads to low level of competition. Landlords are hardly able to reduce these fees.

Thus housing companies holding a high number of units try to meter the tenants’ energy consumption in-house. They hope that this option is more cost effective, but they need to be careful because metering tenants’ consumption is not a business undertaken every day of the year. For housing companies, this option can only be profitable, if their staff is also in charge of other tasks, for example general maintenance tasks. Before deciding to recruit staff for metering tenants’ energy consumption, housing companies should analyse their situation and check whether the conditions required are fulfilled.

A third option for housing companies is to get in contact with other housing companies and to establish with them a joint venture for metering tenants’ energy consumption for all partners involved. Whether such a joint venture is feasible, successful and profitable, also depends on the specific situation of the partners.