May 12, 2022
Utility Costs Taking a Big Bite Out Of People’s Budgets
A spike in utility costs in recent months has been shocking for residents and landlords in Alberta.
And the hike is across the board.
For property owners, the only way to handle this is by offsetting the utility costs to the tenants.
It’s something that is hard to do in the apartment buildings but it’s easier to accomplish in a house, duplex or townhouse where tenants are paying for their utilities directly.
But there is a technology out there that can help.
Sub-metering has become popular in the eastern part of the country and it’s now entering the western market.
This is a system where a landlord, property management company, condo association, or any multi-tenant property can bill tenants directly for their individual use of utilities, which is easily measured for water, gas or electricity.
Many of the older apartment buildings have for example one boiler distributing hot water to all the units. In that scenario, individual costs to the tenant could not be charged.
But now sub-metering companies have shown up and figured out a way to do that. Many of the new buildings today are putting in these two pipe fan coil systems where the landlords can figure out how much heat is going into each rental unit and then tenants can be charged for that use.
When individual tenants start paying for their own utilities, they start to pay attention to their costs and their usage of those utilities.
For landlords, the passing off of costs to tenants becomes increasingly more important as costs of owning a property continue to escalate. Property owners in recent years have been dealing with hikes in property taxes, insurance premiums and now utilities.
And of course, all those impact the bottom line for a landlord.
Those additional costs can primarily be passed off to tenants. Fortunately for landlords, no matter what part of the country they operate in, there’s an environment currently present in the rental sector that mitigates any significant backlash from tenants about rising rents.
In many parts of the country, rental vacancy rates are quite low and the supply of rental units is on the low end.
And that’s enabling landlords to raise monthly rents to cover for the rising costs they’re facing these days as property owners in Canada.
Chris Chornohos has a passion for real estate and helping his clients reach their business goals by providing Real Estate Investors and Owners with the first class valuation and advisory services to close more deals. Chris is also an investor, builder and developer. Reach out to Chris today to help with your Real Estate needs.
