Themes and Issues
It is not always clear who is responsible for paying some household costs
The cost of providing utilities (such as water) and services (such as removal of wastewater) to rental homes is becoming a more frequent cause of dispute between landlords and tenants.
The RTA defines how landlords and tenants will meet the costs associated with a rental property. These costs are referred to as “outgoings”. The Act provides that the landlord will pay outgoings (including rates and insurance premiums) and that the tenant will pay the following outgoings incurred during the tenancy (unless the landlord has agreed in writing to pay for them):
- all charges for electricity or gas supplied to the premises;
- water charges [7] in respect of the premises (including the cost of charges for standard meter readings) if -
- the premises have a separate water meter, and
- the tenancy agreement stated, at the start of the tenancy, that the tenant will pay for any metered water provided to the premises, and
- the water supplier charges for water provided to the premises on the basis of metered usage;
- all charges in respect of any telephone connected to the premises.
There are a number of utilities and services that have both a fixed-cost component (the cost of providing the service to the house) and a variable-cost component (the cost associated with the amount of the service used). For instance, some gas companies are now charging separately for the costs of maintaining gas meters and gas lines to houses – someone has to pay for these costs, even if no gas is used.
For some services, a limited amount is provided for free, with a cost for extra provision. For instance - some councils provide 52 free rubbish bags to each property per year. Any extra bags have to be purchased. When a tenant leaves a property part-way through a year, remaining rubbish bags may or may not be left for incoming tenants.
In other cases, there may be only one gas, water or power meter to a rental property and no way of knowing the actual share of the water or power used by different tenants.
There is a need to establish clear principles to guide the way that household costs are divided. This is necessary to minimise the risks of unfairness, abuse and dispute. For instance, we might need to determine whether or not a tenant should have to pay for the fixed cost of attaching and maintaining the water supply to the house, or just the variable cost associated with the water consumed.
A simple base principle would be for the landlord to pay any fixed infrastructure cost associated with service provision and for the tenant to pay the variable costs associated with the actual volume of the service or utility consumed. However, this may not always be practical and those charging for services may include the fixed cost with the variable cost when it is unbundled from rates.
Questions
- Why are there so many disputes over responsibilities for household costs?
- How should household costs associated with a rental property be divided between tenants and landlords?
Footnotes:
7. This will include wastewater charges (for grey water and sewage), as long as these three conditions are met.