In a furnished rental, the landlord can charge tenants for service charges in two ways: a flat rate (a fixed monthly amount, with no annual adjustment) or a provision on charges (a monthly advance adjusted each year based on actual expenses). The flat rate is legal, easy to manage, and well-suited to mobility leases or properties with few shared charges; however, it exposes the landlord to financial risk if costs increase during the tenancy. The provision offers greater transparency and protects profitability, but requires a justified annual statement. From a tax perspective, the flat rate is advantageous under the micro-BIC regime, while the provision aligns better with the actual expense regime. The right choice depends on the type of property, the landlord's profile, and the length of the tenancy.
When drafting a furnished rental contract, the landlord must settle one key practical question: should service charges be billed as a fixed monthly flat rate, or should they opt for a provision with annual adjustment? This choice has financial and legal implications for both parties, and directly affects the day-to-day management of the property. It also determines how running costs are paid, what tax advantages are available, and how transparent the arrangement is for the tenant. Here is everything you need to know to make the right decision.
Recoverable service charges cover the expenses incurred by the landlord in connection with the use of the property that can be passed on to the tenant. The standard list includes: cold and hot water, central heating, electricity in common areas, maintenance of shared spaces and gardens, household waste collection tax, lift, intercom, and recoverable co-ownership charges set by decree.
In furnished rentals, the legal framework is more flexible than for unfurnished lettings. The law of 6 July 1989 requires the provision with annual adjustment for unfurnished leases, but gives the parties greater contractual freedom in furnished rentals: both billing methods are permitted, provided that the chosen method is clearly stated in the contract.
To find out exactly what you can charge your tenant depending on the type of property, see our guide on recoverable charges in furnished rentals.
With this method, the tenant pays a fixed monthly amount covering all recoverable running costs. This amount is added to the base rent and is final: no adjustment is made at the end of the year, whether upward or downward, regardless of the actual expenses incurred.
The flat rate is perfectly legal in a furnished lease. It is in fact the most common method in this type of contract, particularly for one-year renewable leases and mobility leases. No decree prohibits or caps it, giving the landlord considerable flexibility in setting the amount.
The flat rate can cover all standard recoverable items: water, heating, household waste collection, maintenance of common areas, electricity, caretaking, intercom, management fees. It is advisable to include an indicative list in the contract. The amount chosen must remain consistent with actual expenses — a thorough initial calculation avoids unpleasant surprises. An amount that is clearly excessive may be challenged by the tenant before the conciliation committee.
The clause must explicitly state:
To avoid any contractual dispute, consult our guide on the essential clauses to include in a furnished rental lease.
With this method, the tenant pays a monthly estimated advance on forthcoming service charges, on top of the rent. Once a year, the landlord compares the total provisions received against the expenses actually incurred and produces a detailed statement: the tenant pays the difference if actual charges exceed the advances, or receives a refund if the reverse is true.
This payment method is particularly suited to properties in co-ownership buildings, where the precise calculation of annual expenses depends on collective decisions (votes at general meetings, revision of maintenance contracts, work on shared areas).
Failure to meet these obligations exposes the landlord to challenges from the tenant and may result in a referral to the conciliation committee.
Advantages for the landlord: simplified management, no service charge accounting to maintain, predictable total rent, ideal for managing a property remotely. No annual statement to prepare, no supporting documents to collect.
Main risk: if actual charges rise (higher heating costs, new co-ownership expenses), the landlord absorbs the difference alone until the next lease renewal. An overly optimistic initial calculation can weigh on profitability.
Advantage for the tenant: total monthly outgoing — rent plus charges — is perfectly predictable, with no unpleasant surprise at year end.
Risk for the tenant: without mandatory supporting documents, the tenant cannot verify whether the amount reflects actual running costs. An inflated flat rate represents a definitive extra cost with no right to reimbursement.
Advantage for the landlord: the provisions received adjust to actual expenses, protecting profitability in the event of an unexpected increase. A more financially equitable payment method.
Risk: significant administrative burden (collecting supporting documents, annual service charge statement, compliance with legal deadlines). If provisions exceed actual costs, reimbursement to the tenant is mandatory.
Advantage for the tenant: full transparency through mandatory supporting documents, a detailed breakdown of items, and the possibility of a refund at the end of the period.
Risk: possible upward adjustment, unpredictable total annual outgoing between rent and charges.
The choice has a direct impact on the landlord's tax situation in a furnished rental.
Under the micro-BIC regime, gross income — rent and charges received — benefits from a flat-rate allowance of 50%. Actual expenses are not deducted individually. The flat rate is often advantageous here: the total amount received is directly subject to the allowance without any need to produce supporting documents.
Under the actual expense regime, the landlord deducts actual costs (water, heating, electricity, maintenance, co-ownership charges) from rental income. The provision then becomes more consistent: it aligns amounts received with deductible expenses, reducing cash flow gaps between rent received and charges paid.
In both cases, amounts received under service charges — whether a flat rate or provisions — are included in the declared rental income and used to calculate the tax liability.
To discover the optimisation levers available depending on your status (LMNP, LMP), see our article on furnished rentals and tax exemptions.
A property in a co-ownership building with variable charges (work approved at general meetings, revisable maintenance contracts, central heating) often justifies the provision: actual running costs are hard to forecast, and a fixed flat rate risks being quickly outdated. Conversely, a standalone property with few shared charges lends itself perfectly to the flat rate, where the amount — water, waste collection, routine maintenance — is easy to estimate.
A landlord looking to simplify management, managing the property remotely or under the micro-BIC regime, will naturally be better off with the fixed amount. A landlord under the actual expense regime, with high running costs and an active co-ownership, will find more advantages in the method with an annual statement, which enables closer monitoring of actual expenses.
For a mobility lease (1 to 10 months), the flat rate is almost always the right choice: the duration is too short to organise a meaningful annual adjustment. For a one-year renewable lease, both methods work depending on the type of property. For a long-term tenancy (3 years or more), the provision is often preferable: it prevents a fixed amount set several years earlier from becoming disconnected from actual running costs.
No. Any change can only be made at renewal or when a new contract is signed, with the agreement of both parties.
Only if the contract expressly provides for it, for example through indexation on the IRL in the same way as the rent. Without a revision clause, the amount remains fixed until the end of the lease.
The landlord bears the difference without being able to claim any additional payment from the tenant. This is the main risk of an underestimated initial amount: it can affect rental profitability throughout the entire duration of the contract.
No. Unlike the provision method, the flat rate does not create any transparency obligation. The tenant cannot request a breakdown of expenses or supporting documents.
No. In a furnished rental, the security deposit is capped at two months' rent excluding service charges, regardless of the billing method used.
The decree of 26 August 1987 lists recoverable charges for unfurnished rentals. In furnished lettings, the parties have greater contractual freedom, but this decree is generally used as a reference point when defining the items covered by the flat rate or provision.
Flat rate or provision: there is no universal answer. The right choice depends on your property, your management approach, and your tax situation. In all cases, a carefully drafted service charge clause in the contract remains the best protection against disputes with the tenant.
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