I have a small multifamily property (15 units) and we are considering how to pass on utility cost to the residences. The building consists of one and two bedroom units along with 1 three bedroom unit. unfortunately, there is no good way to sub meter. In fact, several units actually share a single water heater. One thing that is easy to separate is the sewer. We have a standard assessment per month and it is actually based on the number of units in the building. We also have a pretty good idea of the average water bills since we have owned the building for almost 15 years. The thought was to assess each unit a portion of the sewer and average water bill based on the number of residences. I realize that we may not be able to cover the entire utility expense, but if the bill averages $600/month and we can recover even 1/2 or 3/4 of that I would be very pleased. Has anyone ever had any experience with this? Is there any regulation or laws that would preclude us from doing this? Any ideas on how to bill this monthly other than adding it to the actual rent?
Check with your attorney on this one. We own a 14 unit building and have a similar situation. In Nebraska, the landlord tenant act specifically prohibits charging tenants for water service without having a separate meter. However, there is no prohibition against raising the rent and including utilities as part of the rent. If the bill is $600/mo, then increase each unit's rent by $40 and you're covered.
In my experience, tenants are very receptive to this if you note it as a separate line item. Rent is $700, and there's a fixed utilities charge of $30 or whatever it is.
I would set the number slightly lower than what you think they're actually using... if it's on the higher end, some tenants will feel like you're trying to take advantage of them. Recovering 80% of the cost would be great and would be far easier than putting in separate metering.