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How Does Your Landlord Charge for Utility Bills?

By Kravelv @kravelv

Rent payment is an important consideration when choosing your apartment. However, you should also ask how utility bills will be paid. Power bills, in particular, can be very high in New York City since local electricity prices are among the highest in the country. Gas bills also increase during winter, due to the increased need for hot water and space heating.

Landlords follow several approaches when charging utility services to their tenants. This should be an important consideration when comparing apartments.

  • Splitting the bills for the entire building equally among all tenants.
  • Splitting the bills proportionally, based on the floor area of each apartment.
  • Metering each tenant separately, and charging based on the usage of utility services.
How Does Your Landlord Charge for Utility Bills?

The best option is the third since tenants pay for what they use – efficient apartments are rewarded, while wasteful apartments pay more. Before signing a lease, ask if energy and water are metered separately for each apartment.

Disadvantages of Splitting Utility Bills Evenly

Splitting utility bills equally among tenants is a simple solution for landlords. However, this approach has a key disadvantage: it benefits tenants who are wasteful while reducing the savings for tenants who conserve water and energy.

For example, assume you have reduced your monthly energy and water expenses by $50. If you live in a building that splits the bills equally among 10 tenants, everyone gets to save $5 per month. In other words, you don’t get the full benefit of your water and energy conservation efforts.

The opposite also applies if a specific tenant is wasteful. Assume a new tenant consumes $100 more per month compared with the previous occupant. In a building with 10 apartments and equal payments, everyone pays $10 more. Even if you are saving water and energy like in the previous example, you pay more – then $100 in waste offset the $50 in savings.

Splitting the bills based on the size of each apartment is slightly more just since larger units tend to consume more water and energy. However, this does not account for the habits of each tenant. A large apartment can still use less energy and water than a small one if the occupants focus on conservation habits.

Why Separate Metering Is the Best Option

Ideally, the landlord should meter and bill utility services separately for each tenant. With this configuration, frugal tenants get their full savings, while wasteful tenants are charged for all the water and energy used.

Since a building with separate metering allocates expenses more accurately, it promotes energy efficiency and water conservation. As a tenant, you may be less motivated to save water and energy when you are charged a part of the waste caused by others.

Checking the Appliances and Plumbing Fixtures Before Renting

Even if you focus on conserving water and energy, the potential savings may be limited if an apartment building has old installations. Before you sign the contract, check the existing appliances and plumbing installation. Consider the following guidelines:

  • Incandescent and halogen lamps are the least, while fluorescent lights have decent efficiency. The LED lighting is the best option available.
  • Old window-type air conditioners have very high power consumption, especially in summer. Mini-split systems are much more efficient, especially if their Seasonal Energy Efficiency Ratio is above 20.
  • Furnaces, boilers and combustion heaters use an efficiency metric called the Annual Fuel Utilization Efficiency, and modern units exceed 90%.
  • Water heating systems that use gas combustion or a heat pump are the most economic. Avoid electric resistance heaters, since their running cost is very high.
  • Watch out for leaky plumbing fixtures, since they can increase both your water bills and your heating bills.

You can minimize your energy and water bills if you find an apartment with separate metering and modern installations. If the building has old installations and utility bills are split evenly, you will pay a lot more even if you conserve water and energy.

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Author Bio:

How Does Your Landlord Charge for Utility Bills?
Michael Tobias, PE, LEED AP, CEM.

Michael Tobias is the founder and principal of Chicago Engineers, an Inc 5000 Fastest Growing Company in America. He leads a team of 30+ mechanical, electrical, plumbing, and fire protection engineers from the company headquarters in New York City; and has led over 1,000 projects in Chicago, New York, New Jersey, Pennsylvania, Connecticut, Florida, Maryland and California, as well as Singapore and Malaysia.

He is a graduate of Georgia Tech class of 2004, with a Bachelors of Mechanical Engineering with honors. His innovative approach to MEP engineering comes from graduating GE’s Engineering Leadership Program, where he designed wind turbines and biofuel power plant engines. Michael’s passion for design is energy efficiency and green technology. His focus is on integrating MEP/FP engineering design with architecture to create as seamless a system as possible. He is an advocate for green design and technologies and has designed to both Passive House and Net 0 energy standards. He has spoken numerous times at the AIA, been featured in Georgia Tech’s Alumni magazine, and is an engineering expert on Discovery Channel’s show “Impossible Engineering”.

A New York native, Michael grew up in Rockville Centre, LI. He currently lives in Brooklyn with his wife and children. Outside of work, he enjoys exploring the outdoors, whether it’s on a bike, a pair of skis, or a surfboard. He is passionate about growing personally and professionally every day, and about doing innovative work in the engineering world to help disrupt the traditional construction industry.


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