Submetering Part Two: The Landlord’s Perspective

Previously, we discussed the benefits of utility submetering from the perspective of the tenant. This article will briefly examine the benefit of submetering for property owners and managers and how its use can help conserve natural resources, especially when dealing with larger properties.

Submetering is the practice of determining a living unit’s utility usage via individual meters. Submeters are not only beneficial in residential settings it is also successfully used in commercial settings, as well. Utility costs were historically included in the rent which provides little to no incentive to conserve. When tenants pay for what they actually use, they quickly become aware of their utility consumption and will become more careful about wasting water, gas and electricity.

If installing individual submeters is not feasible because a residential building is too old or a commercial building is too large, then a fair Ratio Utility Billing System (RUBS) may be used instead. A fair RUBS will estimate utility usage based on actual property bills and industry standards for each unique type of residential unit or business.

Judiciously using utilities directly correlates with conserving natural resources which is not only something to feel good about but is necessary for the survival of the planet. But what about saving money? Can submetering really help a property owner increase their net operating income (NOI) and decrease their operating costs?

Absolutely. By requiring your tenants to pay for their own utility usage, they will likely become more aware of their actual usage and will hopefully be more conservative with their utility usage. Once they have a bill in hand that presents them with the utilities being used in their home, it will hopefully make them realize if they are being wasteful or not. If they choose to use utilities more conservatively, there will be less wear-and-tear on utility-delivering devices such as plumbing fixtures, air conditioning units, hot water tanks, and the like. This means that you will not only save money on repairs but you will not have to spend as much time on routine maintenance. And since the utility submetering company will handle all the billing, you will save even more time by having one less thing to worry about. Your NOI will increase, your property values will increase, and you may even get a utility rebate at the end of the year.

If you are building new housing units, submeters can easily be installed in each unit. If you have or are buying an older building, chances are good that the plumbing and electricity can be retrofitted to accept submeters. If not, then a RUBS may be a better option for you. It is clear that submetering can save you money in more ways than one, but an added bonus is that you will be able to advertise your property as being environmentally-friendly. And it will not be hype but a reality, backed by an actual utility submetering company who will help you and your tenants every step of the way.