Cost allocation: By floor area or by consumption?

"Why should I pay the same as my neighbor if he has a double apartment and heats at 25 degrees?" – This is a typical complaint you'll hear when you share costs unfairly. The question of whether to bill by floor area or by consumption is not just technical - it has a direct impact on the relationship with tenants and their willingness to pay.

In this article, I will show you when to use which method the law says and how to set up a system that will be fair and defensible.

Two basic approaches to billing

By floor area

How it works: Total costs divided according to the ratio of floor areas of individual apartments.

Example:

• Total heat costs: Kč 100,000
• Apartment A: 50 m² (20% of the total)
• Apartment B: 100 m² (40% of the total)
• Apartment C: 100 m² (40% of the total)

Apartment A pays 20 Kč 000, apartments B and C Kč 40,000 each.

Advantages:

• Simplicity
• No need for meters
• Stable costs for tenants

Disadvantages:

• Unfair for thrifty tenants
• Motivates to waste
• Frequent complaints

According to actual consumption

How it works: Everyone pays for what they actually consumed (measured by the meter).

Example:

• Total heat consumption: 500 GJ
• Apartment A consumed: 80 GJ (16%)
• Apartment B consumed: 170 GJ (34%)
• Apartment C consumed: 250 GJ (50%)

For costs of Kč 100,000, A pays Kč 16,000, B Kč 34,000, C Kč 50,000.

Advantages:

• Fair
• Motivates to save
• Fewer conflicts (everyone is to blame)

Disadvantages:

• Necessary meters
• Higher installation and maintenance costs
• More complicated billing

What the legislation says

Act No. 67/2013 Coll.

Sets the rules for billing services in apartment buildings.

Key provisions:

Heating and hot-water allocation:

• Apply the current decree and the building's approved method for the basic and consumption components.
• The applicable percentages, adjustments and hot-water method depend on the current rules and building; do not use a universal 30/70 split.

Current heat-allocation decree

Follow the current wording of Decree No. 269/2015 Coll. and related rules for meter use, correction calculations and any permitted limits; do not hard-code deviation percentages.

When measurement is mandatory

Compulsory measurement:

• Heat: indicators or meters where required by the current rules
• Hot water: residential water meters where required by the current rules
• Cold water: residential water meters where required for billing

Exceptions:

• Technically impossible installation
• Disproportionately high costs

How to bill individual services

Heat (heating)

Legal model:

• Basic component: according to the current decree and the building's approved allocation method
• Consumption component: according to meters or indicators under the current decree and approved method

Why the combination? The basic component covers the heat losses of the building and the fact that the outer apartments have a higher consumption through no fault of their own.

Calculation example: Total costs: Kč 100,000 The basic component (40%): 40 Kč 000 → divided according to area Consumption component (illustrative 60%): Kč 60,000 → divided according to meters

Hot water (DHW)

Legal model:

• Basic and consumption components: allocate hot-water costs under the current decree and approved method; the ratio is not universally 30%/70%

Why the basic component? It covers losses in distribution systems (circulation) and riser heating.

Example: Total costs for hot water: Kč 50,000 Illustrative example only: apply the current decree and approved method to determine the basic and consumption components; do not treat the displayed 30%/70% figures as universal.

Cold water

Usual model: 100% according to residential water meters

Alternative (without meters): According to the number of people (less fair)

Other services

Service	Recommended way
Cleaning of common areas	According to the area or in equal parts
Lighting of common areas	According to the number of people or area
Elevator	By area or floor
Waste removal	According to the number of people
Maintenance of greenery	According to area

Correction factors

Location coefficients

Apartments in different places of the house have different heat losses:

• Ground floor (above the basement): +10–15%
• Top floor (under the roof): +10–15%
• Corner apartment: +10–20%
• Interior apartment: foundation (1.0)

Example: Flat A is corner on the ground floor → coefficient 1.25 Flat B is internal on the 2nd floor → coefficient 1.0

The consumption component of apartment A is multiplied by 1/1.25 = 0.8 (it pays less because its location is disadvantageous).

Deviation limit

The current decree may require adjustments to extreme consumption. Apply its current formula and limits for the building; do not use fixed -20%, +100% or +200% thresholds.

Practical examples

Example 1: Apartment building 5 apartments - heat

Input data:

• Total cost of heat: 150,000 Kč
• Basic component: 40% = 60,000 Kč
• Consumption component: 60% = 90,000 Kč

Apartment	Area	Area fraction	Consumption (GJ)	Consumption share
1	60 m²	20%	15	15%
2	80 m²	27%	25	25%
3	50 m²	17%	20	20%
4	70 m²	23%	18	18%
5	40 m²	13%	22	22%
Total	300 m²	100%	100	100%

Calculation for apartment 1:

• Basic component: 60,000 × 0.20 = 12,000 Kč
• Consumption component: 90,000 × 0.15 = 13,500 Kč
• Total: 25,500 Kč

Example 2: Warm water

Input data:

• Total costs: 80,000 Kč
• Illustrative 30%/70% example; use the current decree and approved method for the actual allocation.

Apartment	Area	Area fraction	Consumption (m³)	Consumption share
1	60 m²	24%	8	20%
2	80 m²	32%	12	30%
3	50 m²	20%	10	25%
4	60 m²	24%	10	25%
Total	250 m²	100%	40	100%

Calculation for apartment 1:

• Basic component: 24,000 × 0.24 = 5,760 Kč
• Consumption component (illustrative): 56,000 × 0.20 = 11,200 Kč
• Total: 16,960 Kč

Frequent problems and solution

Problem: The tenant does not pay and saves at the expense of others

Situation: The tenant in the outermost apartment is almost unheated. Heat passes from the neighbors.

Solution:

• Current statutory adjustment limits
• Positional coefficients under the approved calculation
• In extreme cases, solve with a contract

Problem: Empty apartment

Situation: The apartment is unoccupied, but heated to a minimum.

Solution:

• The basic component applies according to areas
• Consumption component according to meter (close to zero)
• Prevents abuse

Problem: Faulty meter

Situation: Meter shows unrealistic values.

Solution:

• Calculation according to the average of other apartments
• Replacement determination of consumption
• Document and repair/replace

Problem: Tenants complain about unfairness

Solution:

• Transparently explain the methodology
• Submit a detailed calculation
• Refer to the legal limits

What is fairer?

Arguments for billing by area

• Simpler administration
• Stable costs
• Suitable for homogeneous apartments

Arguments for consumption billing

• Motivation to save
• Fairer for individuals
• Lower total costs (energy savings)
• Corresponds to modern trends

Verdict: The combined system (as imposed by law) is a compromise. The basic component ensures solidarity, the consumer component fairness.

How to implement a fair system

Step 1: Install meters

Provide residential meters/indicators wherever technically possible.

Step 2: Data logging

Regular readings and quality logging in property management software.

Step 3: Determination of parameters

• Basic/consumption component ratio (within legal limits)
• Location coefficients (according to house documentation)
• Method of billing for other services

Step 4: Transparent billing

Each tenant receives:

• Overview of total costs
• His consumption and share
• Comparison with the average
• Explaining the Methodology

Step 5: Communication

Proactively explain how the system works. An informed tenant protests less.

Summary: Recommended Approach

Service	Base Folder	Consumer component	According to
Heat	40%	60%	Area / Meters
DHW	Current method	Current method	Area / water meters
Cold water	–	100%	Water meters
Common electricity	100%	–	Area or persons
Cleaning	100%	–	Area
Waste removal	–	100%	Number of people

Fair billing is not just about math – it's about trust. When tenants see that the system is fair and transparent, they pay more willingly and argue less. And you have a more restful sleep.

> Czech-law scope and editorial note: Legal, tax, accounting, tenancy, service-charge, condominium, metrology, insurance and data-protection statements in this article refer to the Czech Republic and the rules effective for the relevant date. Figures and examples are illustrative, not legal or tax advice. Verify current rules with the relevant Czech authority or a qualified adviser.

> Metrology and heat clarification: Verification periods depend on the instrument type and current UNMZ rule. Heat allocation uses the current Czech decree and may use a 40%, 50% or 60% basic component according to building energy performance, with possible adjustments; hot-water allocation is separate. Do not treat a 30/70 or ±20% statement as universal.