When searching for a rental, the primary expense to consider is the rent. But a close second is the utilities.
Utility costs will become increasingly important to renters as many utility companies consider large rate increases — about 30 percent over six years in the case of Seattle Public Utilities.
Any lease agreement between a landlord and tenant should clearly state who is responsible for each utility account. It should also specify the arrangement for prorating utility bills when multiple units share a single meter or service bill.
The issue that tenants should keep an eye on most when receiving a prorated utility bill is equity. The most common measurements for estimating prorated costs are the unit’s square footage as a percent of the entire building, and the number of occupants per unit.
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Water, sewer, garbage and electricity are typically prorated based on the number of people per unit, because use of these services usually correlates with the number of people using them.
Units heated by natural gas are often prorated based on the square footage of each unit in relation to the total size of the building. That’s because it takes the same amount of gas to heat a unit whether there’s one or 10 people living in it.
Units in which the heater and kitchen appliances are both electric are trickier — it makes the most sense to prorate by square footage for the heat, but by the number of occupants for the kitchen. In these cases, there is no wrong way to prorate the bill.
It’s common for landlords to choose to pay the first 10 percent of each bill rather than breaking down the bill completely. This helps to pre-empt any complaints of “that person is home more” or “they have more guests.”
In any case, the method for prorating a bill must be disclosed by the landlord. And for utility accounts that are in the name of the landlord, the amount cannot be more than what he or she is being billed by the utility.
In Seattle, there’s an additional set of regulations for prorating utility bills at properties where three or more units share the same meter for service. Landlords who change billing practices at properties with single-meter utility bills must provide 90 days’ notice to the tenant before the end of the lease.
The notice provided to the tenant must include a copy of Seattle Municipal Code 7.25, a detailed description of the method being used to determine each tenant’s portion, and how the common-area utilities are being allocated. Information about who will be doing the billing, how and when payments are to be made, and any service charges must also be included.
The Seattle code also requires landlords to post or provide copies of the three most recent bills with a copy of the utility billing breakdown, and to keep copies of the bills for at least two years; tenants may request copies at any time.
Sean Martin is the director of external affairs of the Rental Housing Association of Washington, a not-for-profit association of more than 5,000 landlord members statewide. Rental Resource is the organization’s biweekly column. For more information for landlords or tenants, visit rhawa.org.