Who’s the one paying water bills, the tenant or the landlord? What’s the difference between different states regarding water laws for landlords when it comes to charging tenants for water supply and usage?
The first section will focus on definitions of all relevant terms for the article. The next two will explain who’s paying for water use, who’s paying for water supply charge, and who’s paying for sewer bills in a rental property, whether it’s the landlord or the tenant. Then we’ll analyze the changes in water-connected laws in four Australian states – New South Wales, Victoria, Queensland, and South Australia.
Finally, we’ll explore what are landlords allowed to do and what they aren’t allowed to do when and if tenants aren’t paying their bills. Knowing this is important for both tenants and landlords (property investors).
Utility Bills In A Rental Property
First things first, what is a rental property?
Rental property is one of the subcategories of an investment property.
And, what is an investment property?
Investment properties are properties bought for one singular reason: to gain even more income from them. This can be done through collection rent (in the short-term) or through the resale of the said property further down the line.
The first option, you’ve guessed it right, is a rental property. There are three types of rental properties;
- residential, which refers to flats and houses,
- commercial, which refers to hotels, restaurants, and other similar buildings, and finally,
- mixed-use rental properties which combine the two, and are most commonly one building with a commercial space downstairs and a residence upstairs.
The utilities that come with investment properties, or rental properties in this case, are the same as in every other home. They, among others, include electricity, gas, trash collection, sewer, internet, cable, telephone, security or alarms, and, of course, water, our main topic.
Who should pay what, with a special focus on water, will be explored in the next sections. For this split between who pays what is important, as it determines the profit the landlord receives as well as the costs of living for the tenant.
Who Pays Water Use In A Rental Property? – Landlord Or Tenant?
There is no right or wrong way to divide the utility costs, as well as there’s no law that prescribes who should be paying what in most countries. The way most landlords handle utility costs is to divide them with the tenant.
In most cases, the landlord will be paying water, sewers and trash collection. The tenants will be paying for the “extras” such as cable, internet and alarms or other forms of security, while gas and electricity depend on individual cases.
The reason most landlords choose to pay for water themselves, even though there’s no law regulating that, is for reasons of convenience. In addition, in most of the countries including Australia, the water bill confirms the ownership of the property. For example, the water bills will be in the name of the owner, but never addressed to the tenant.
As such, water costs are difficult and not practical to transfer from one individual to another (without a selling the property), and it’s also potentially risky not having water flow the pipes constantly, especially during winter.
There are three most common ways utility bills, including water bills of any kind, are settled.
- Utilities included in the rent
In this version, all of the utilities are in the landlord’s name, and they incorporate the fees into the monthly rent. This results in a higher monthly rent, a downside of what might be that the tenants might be thrown away due to the higher price.
This option does work if you rent out a room of a house where there is no separate meter to monitor the use of utilities.
- Monthly utility fee
Just like with the previous one, this option allows the landlord to have full control of their property by having all of the utilities in their name. But it comes with an additional chore – bookkeeping and managing the additional bills. It’s important to work according to the lease agreement as well as within the laws of the state of residence.
- Utilities are tenants’ responsibility
This option allows tenants to take the most utilities (e.g. electricity, gas, NBN, internet…etc) in their name and pay for them like that. This option lowers the risk for the landlord and raises the tenants’ responsibilities. Most tenants will act smarter with utilities if they’re the ones responsible for it.
As noted earlier, the water bills are likely to remain on the landlord’s name, but the landlord will share it with the tenant asking them to pay it to the landlord.
This option is most common in the mainstream residential rental market in Australia.
As all three of these options has their own pros and cons, the vast majority of landlords will choose a mixture of the three or the 3rd option above. It’s important to state the exact responsibilities of both sides in the rental agreement, so both sides know their responsibilities before committing to start renting/letting.
Who Pays Water Supply Charge In A Rental Property? – Landlord Or Tenant?
To be able to answer this question, first, we need to explain the difference between water usage or water supply.
The simplest answer to that is: water supply charge is money paid to the water company that supplies the property with water, the water that comes through the pipes and can be used or not used. The water usage charge is the part of your water bill charged for the amount of water used from the supply.
Now, onto more professional explanations from experts.
Water supply is the supply of water by public utilities or even individuals, and that through a system of pumps and pipes, let’s say the local water infrastructure. Water supply cost is mainly fixed, and the standard price is approximately US$1–2 per cubic meter (in the US), which also depends on local costs and local water consumption. This price is generally lower in lesser developed countries.
Water usage or water consumption we recognize through water footprint. Water use can be calculated by measuring the water consumed (including the evaporated and polluted water) per unit of time.
The term water footprint was introduced in 2002 to serve as an indicator of water usage. This detail is important to monitor, as the earth’s water supply is getting thinner by the second. But that’s a topic for another time.
On average, one household uses 300 gallons of water. This goes to cooking, showering, drinking etc. Households, however, aren’t the lead consumer of water. Water is used by the government departments, in cities, in parks and fountains, it’s used to gain electricity, it’s used in industry, such as to cool metals, in water-dependent transport.
The biggest spender of water, as well as many other valuable resources, is of course farming. For example, 2000-2500 gallons of water is wasted on producing just one pound of beef. Can you believe that?
Finally, to give an answer to the question from the above subtitle, the water supply bills are ideally paid by the owners of property it supplies – landlords, while tenants pay water usage portions of the water bills as utility bills.
Those water usage charges are managed through your rental manager. That’s our recommendation as a best practice for property investors and developers.
Who Pays Sewer Bills In A Rental Property? – Landlord Or Tenant?
As with the previous instances, there are no set laws determining who pays what in most countries.
In Australia, different states have different rules regarding this topic, and in the next section, we’ll compare four Australian states and their laws regarding water-related bills. Moreover, it depends on the agreement between the landlord and the tenants as well as the type of property rented out.
For example, in a single unit house, the tenant will most likely need to pay all the utility bills, including water and sewage bills. This also relates to one of the previous sections, so I will skip these repetitive details in this one. For that reason, it’s prudent to have a very thorough and detailed conversation between the tenant and the landlord.
Some experts, though, state that sewage bills don’t belong to utility bills like water does, which means that tenants aren’t responsible for paying that. Interesting is also to ponder over who’s the one paying for sewer blockages and drain cleaning. Ultimately it comes down to evidence – the question is whether the landlord can present enough evidence stating it was the tenant’s fault, and thus pin the bills on the tenants.
This can be done by taking photographs of the pipes before and then comparing them with the after-the-clogging ones. While it’s the landlord’s responsibility to keep the property safe for the tenants, the tenants have the responsibility to maintain the property. The landlord should be clear with their demands and penalties if these demands aren’t respected.
For example, if the drains are blocked regularly due to hair (of tenant’s) escaping from the shower to the drains, who should be responsible for such maintenance costs? In our experience, that is a solid example where landlords could push responsibility to tenants, because they let their hair go in the water waste line. Does it make sense?
Problems with thus arise when trying to determine if a certain problem is a repair or maintenance.
Now let’s look at how Australian tenant legislation are around water supply and usage charges, within States.
How The Law Change Between The Australian States – NSW vs. VIC vs. QLD vs. SA
In this section, we’ll compare 4 different Australian states and their laws regarding water utilities. Each state has a different law, so it’s important to get familiar with the law valid in your state.
NSW Law on Charging Tenants for Water
Let’s start with New South Wales. NSW tenancy Laws state who pays for which utility, and even though we’ll focus only on water. As mentioned before, it’s common practice to set these boundaries within the tenancy agreement for minimal confusion.
Since water is always connected, the report of the water supply will be in the landlord’s name, as elaborated in the previous sections. Therefore, it’s landlords’ responsibility to pay for all water and all sewerage supply service charges.
There are only three possible instances in which the tenant pays for water in NSW:
(1) if the property is separately metered, or if water is delivered by vehicle,
(2) if the charges are not higher than the amount the landlord pays for the water supplier, and
(3) if the property meets the ‘water efficiency’ standards.
Note, the water usage can only be requested by the landlord (or his Tenant Manager) within 3 months from the bill, and the tenant must receive a copy of the bill. These bills should also be paid separately from the rent.
SA Law on Charging Tenants for Water
In South Australia, who pays for water supply charges is also agreed upon among the landlord and the tenant, and this must be written in the tenancy agreement. If the tenant is responsible for any water charges, they must be the ones paying for the bill, and that only after
the bill from SA Water is received. The tenant must receive a copy of the bill. The sewage charges will always be the landlord’s responsibility.
QLD Law on Charging Tenants for Water
Laws in Queensland are also similar. Water charges are the landlord’s responsibility, except in three instances:
(1) if the property is separately metered, or if water is delivered by vehicle,
(2) if the property meets the ‘water efficiency’ standards, and
(3) if the tenancy agreement states it’s the tenant’s responsibility.
It’s advised to reach water efficiency standards, so make sure to educate yourself on what these include for a great bonus when paying water bills.
VIC Law on Charging Tenants for Water
The state of Victoria has similar rules, in which the tenant pays for the water supply if the property has its own meter, unless the landlord offers to pay. The agreed conditions must be stated in the rental agreement. Sewage bills are, however, still the landlord’s responsibility.
On the other hand, if the property doesn’t have its own meter, the landlord must pay. All other charges related to water supply and sewerage or drainage services are also landlord’s responsibility, including charges relating to the pumping out and cleaning of sewerage tanks, unless the tenant has damaged it.
What Can Landlords Do And Not Do If Tenants Do Not Pay For Water?
We’ve talked about the tenant’s obligations, now let’s see what the landlord’s obligations are if the tenants aren’t fulfilling their obligations.
The first question is whether the landlord should pay the water utility bills instead of the tenants? The answer to that is yes. The landlord’s obligations do not change if the tenant doesn’t pay the utility bills – the bills must be paid, so it’s the landlord’s responsibility to ensure that the bills are continuously paid. After all, the landlord is still the owner of the property, and as such the tenant’s non-payments do not absolve the landlord of payment.
Recently, it’s become a common practice only for the landlord to open a utility account, and it is recommended overall for landlords to have everything in their name. That way, the landlords will be reminded of the bills aren’t paid in time.
Now onto things that landlord absolutely mustn’t do. Even if the tenant isn’t paying utility bills, it’s illegal disconnecting the services without a court order in some states.
The final solution if the tenants aren’t paying is, of course, eviction. If tenants break the agreement in any way, the landlord holds the right to evict them from the property. It’s in the tenant’s best interest to communicate with the landlord should they have any financial or other issues that’d prevent them from following the agreement.
Conclusion
The focus of this article was the water bills in Australia. The aim was landlords, who may not know what the laws regarding water bills were.
The utilities that come with rental properties are the same as in every other home. They, among others, include electricity, gas, trash collection, sewer, internet, cable, telephone, security, or alarms, and water.
There is no right or wrong way to divide the utility costs, as well as there’s no law that prescribes who should be paying what. In most cases, the landlord will be paying for water (at least supply charges), sewers (at least supply charges), and council rates (e.g. trash collection). The tenants will be paying for the “extras” such as cable, internet, and alarms or other forms of security, as well as gas and electricity.
But, who pays for water supply, water consumption, and sewers? Water supply is the supply of water by public utilities or even individuals. That through a system of pumps and pipes, and it’s the landlord’s responsibility since the landlord is the owner of the piece of land. Water usage or water consumption is recognized through water footprint. On average, one household uses 300 gallons of water. And it’s the tenant’s responsibility to pay for the water they consume. Sewage bills, however, don’t belong to utility bills as water does so they’re also the landlord’s responsibility.
Each Australian state has different laws regarding the topic, and we’ve compared the four of them in the lengthiest section. We’ve also established they aren’t so different after all. Learning the differences, though, and being familiar with the laws in your state and territory is extremely important.
And finally, what to do if the tenant isn’t paying? The landlord isn’t permitted to stop paying the utility bills either. It’s their property, and they must continue paying the utility bills even if the tenants don’t for some reason. What the landlord is allowed to do, however, is eviction. This should be the final resort; it is advised to have a heart-to-heart conversation with the tenant beforehand.
