As a landlord, managing utilities effectively is crucial for maintaining a positive relationship with tenants and ensuring smooth operations of your rental property. If you’re unsure of your responsibilities, you can use the following tips as a guide to help you have a better rental experience.

Decide Who Is Responsible for Utility Bills

There is no set rule for who pays the utilities. The utility account is registered under one name, and only that person has access to the account information. Make sure to decide upfront who will be responsible for paying the utilities so you can discuss it with your tenants upon signing the lease.

Include Utility Terms in Lease Documents

Ensure that your lease agreement clearly outlines who is responsible for paying utility bills. In cases where you, as the landlord, handle the utility billing, the lease might specify either a set amount or a variable amount that reflects the actual bill for covering these costs.

If the lease states a specific amount for utilities, this figure can't be changed unless both you and your tenant agree to modify it. On the other hand, if your tenant is required to establish their own utility account, then the cost of these utilities won't be included in the rent they pay to you. They should pay their bill directly to the service provider.

two people shaking hands

Educate Tenants on Utility Responsibilities

If your tenant needs to pay for services like water, electricity, or gas, make sure they understand the terms of their agreement with the utility companies. This includes knowing about cancellation policies, when the service ends, costs, and rules about the service renewing automatically.

Urge your tenants to arrange for these services to start at least three days before they move in. That is why it's important that your lease agreement clearly states who is in charge of paying the utility bills for the property.

What’ more, you should inform tenants about the sub-metering company and how to set up utility billing if your property uses sub-meters. This information should be provided before the lease signing​​.

Know How to Handle Unpaid Utility Bills by Tenants

Landlords are not liable for unpaid utilities if the account is in the tenant's name. In case of non-payment, utilities might be disconnected without notice. To prevent problems like burst pipes or flooding that can happen if utilities are cut off, the landlord might want to speak to the utility company about setting up a special agreement like a Premise Vacancy Agreement, also known as a Landlord Agreement or Automatic Power Install.

This agreement doesn't stop services from being disconnected if bills aren't paid, but it does lessen the chance of disconnection when there's no one officially signed up for utilities. It ensures that electricity or gas services are automatically transferred to the landlord or the property management company.

hand holding a credit card to make an online payment

Understand the Consequences if Tenant's Fail to Sign Up for Utilities

If a new tenant doesn't sign up for utilities, as the property owner, you'll be responsible for all utility charges from when your previous tenants stopped their service. If no one is registered for utilities, the default utility provider in your area will automatically sign you up and send bills to your last known address.

Know the Implications of Tenants Not Paying Water Bills

Municipalities manage the water services and decide how to bill customers. Some places bill directly, while others use private companies. Usually, the property owner is responsible for the water meter, and in many cases, only they can be billed, not the tenants. If tenants don't pay their water bills, these unpaid charges might be added to the property owner's tax bill.

Learn How to Enrol for Services Between Tenants

Use Regulated Rate Option (RRO) retailers for quick service enrolment and disconnection between tenants. Landlords can automate this process. What’s more, consider having a Premise Vacancy Agreement with an RRO retailer as this can prevent surprises in billing and disconnections.

person in black signing a document

Remind Tenants to Register Utilities in Their Name

Landlords cannot register utilities in a tenant's name. It’s important to remind them to do this if this is what you have agreed upon in the lease. It should also be noted that landlords cannot access tenant utility billing information for privacy reasons. That said, landlords are notified of pending disconnections if the billing is in their name, not the tenant's​​.

Disconnect Utilities Between Tenants

You can ask your utility company to disconnect services to reduce charges when you don't have tenants. However, check for any idle billing charges, which are fees for maintaining connections even when not in use. Remember these points:

  • In winter, companies might not disconnect services.
  • Turning services back on might have a reconnection fee, which can be costly if the service is off for a long time.
  • If gas service is off for over six months, you may need to pay for an inspection before it's reconnected.

Resolve Tenant Disputes Outside of Court

You’ll need to settle disputes with your tenant over matters like lease termination, unpaid rent or utility bills, security deposits, property damage, repairs, or other conflicts. If you don’t know how to go about solving complaints, the Residential Tenancy Dispute Resolution Service (RTDRS) is available to help.

You should also consider partnering with a property management firm as they can help address tenant complaints and managing your day to day rental operation.

Bottom Line

Each of these points offers practical guidance for landlords to manage utilities efficiently and effectively, ensuring both legal compliance and a harmonious landlord-tenant relationship. If you’re still unsure, it’s recommended to seek advice from a professional property management company. For a smooth rental experience, contact GoodDoors Property Management today!