As a landlord in Ontario, one of the biggest decisions you will have to make is whether or not to include utilities in the rent for your rental property. This can be a complex issue with many factors to consider, and it's important to understand the laws and regulations surrounding this topic.
What are Utilities?
Before we dive into the specifics of including utilities in rent, let's first define what we mean by "utilities." In general, utilities refer to services that are necessary for a tenant to live comfortably in a rental property. This can include electricity, gas, water, and even internet and cable services. In Ontario, landlords are responsible for providing essential services such as heat, water, and electricity. However, they are not required to provide non-essential services like internet or cable.This means that as a landlord, you have the option to include these non-essential services in the rent or have your tenants set up their own accounts.
The Pros and Cons of Including Utilities in Rent
There are both advantages and disadvantages to including utilities in the rent for your Ontario rental property. Let's take a closer look at each.Pros:
- Convenience: By including utilities in the rent, you are providing your tenants with a convenient and hassle-free living experience. They won't have to worry about setting up accounts or paying separate bills each month.
- Stable Income: Including utilities in the rent can also provide you with a stable and predictable income. You won't have to worry about fluctuations in utility costs or tenants falling behind on payments.
- Attracting Tenants: In a competitive rental market, offering utilities included in the rent can be a major selling point for potential tenants.
It can make your property stand out and attract more applicants.
Cons:
- Higher Rent: Including utilities in the rent means that you will have to charge a higher monthly rent to cover the costs. This may make your property less attractive to budget-conscious tenants.
- Utility Usage: When utilities are included in the rent, tenants may be less mindful of their usage, resulting in higher utility bills for you as the landlord.
- Responsibility: As the landlord, you will be responsible for any maintenance or repairs needed for the utilities. This can add to your workload and expenses.
The Legalities of Including Utilities in Rent
In Ontario, there are no specific laws that dictate whether or not landlords must include utilities in the rent. However, there are some regulations that landlords must follow if they choose to include utilities in the rent. The Residential Tenancies Act (RTA) states that landlords must provide tenants with a written tenancy agreement that outlines all terms and conditions of the rental agreement, including any additional fees or charges.This means that if you choose to include utilities in the rent, it must be clearly stated in the tenancy agreement. The RTA also requires landlords to provide tenants with an itemized statement of their utility costs at least once every 12 months. This statement must include the total amount paid by the landlord for utilities and how this amount was divided among the tenants.
Alternatives to Including Utilities in Rent
If you decide not to include utilities in the rent for your Ontario rental property, there are a few alternatives you can consider:- Submetering: This involves installing separate meters for each unit in a multi-unit building. Tenants are then responsible for paying their own utility bills directly to the utility company.
- Inclusive Rent: With this option, you charge a flat monthly rent that includes all utilities. This can be a good compromise for tenants who want the convenience of utilities included but don't want to pay a higher rent.
- Utilities Included with a Cap: This option allows you to include utilities in the rent, but with a cap on the amount.
If the utility costs exceed the cap, tenants are responsible for paying the difference.
