Hi there, I am a relatively new investor/landlord. I purchased a single family home with an attached in-law suite in southern Ontario 2 years ago. I currently have it rented as 2 separate apartments. A one bedroom unit(in the suite) and a 2 bedroom unit (in the original house). Because it was originally a single family home, the utilities are all connected and at the time of purchase because I had put 20% down, I had no cash available to separate them.
I decided to get it rented and start having money coming in. I have had tenants in the 1 bedroom unit for 2 years now, and they are great. But this spring I had new tenants move into the 2 bedroom unit, and my utility bills have been climbing and climbing and climbing ever since.
I have already tried setting the thermostat to 70 degrees and having it in a lock box to manage heat/hydro consumption... but they just break into the box and crank the heat back up, or plug in space heaters to keep the house at 75 degrees. The house is on city water/sewer and water bills seem to keep climbing as well.
At this point I do have cash available to separate the utilities, but Im not quite sure what I can do legal in terms of changing the rental agreement.
I was hoping someone else might have found themselves in a similar situation, or may have some advice at to what I can do to either regain control of the utility costs or transfer that cost to the tenants?
You can't change the contract that is currently in-force. However, you *should* be able to change it upon renewal. I say should because parts of Canada have really insane pro-tenant laws and I have no clue about Ontario.
If you could prove that the utilities were being abused, you MAY be able to bill them for it. When you signed the lease you had a reasonable expectation of what their utility usage would be. For example, if you could show that an average 2BR unit with the same number of people consumes $100/month worth of utilities and they are consuming $800/month, their usage would be so far about of normal expectations that they could be found liable for the overage. Is it worth the attorney fees and rolling the dice with the courts? Probably not. Especially since setting the heat at 75 isn't exactly crazy.
Have you tried talking to them? If they won't work with you, best you can do is install low flow water heads and use a password protected thermostat. You could probably ban the space heaters under the guise that they could be a fire hazard.
Best case, when their lease is up, use one of the loopholes to non-renew. Clearly the unit isn't energy efficient. You need them out to do major repairs.
I recommend your next lease include a "ceiling" for utility use. If the average utility bill is $100 then you can state the rent rate includes utilities up to $120 per month and anything above that will be passed on to the renters. that ensures they take responsibility for abusing the utilities.