Both landlords and tenants have to deal with rising utility costs. This is affecting their budgets and creating possible areas of dispute as well as decreasing satisfaction. However, this issue that is a problem for both landlords and tenants may be an opportunity for them to collaborate.
Both parties may reduce their increased expense of utilities by working together to improve the efficiency of their properties and by improving communication. Thus, what could become a source of tension, becomes a collaborative effort in reducing expenses.
Why Rising Utility Costs Affect Both Landlords and Tenants?
Utility costs are a financial liability that landlords and tenants both face. When utility bills rise it does not just strain one party, it creates an economic ripple effect that impacts the entire rental relationship’s stability and satisfaction level of both parties.
- Landlords will experience their profits decline as included utility costs increase. Tenant frustration with respect to billing can lead to higher turn-over as well.
- Tenants will see the portion of their income used for these essential, non-negotiable costs increase as average utility rates trend upward.
Therefore, managing consumption becomes a key way for both parties to protect their interests, either their bottom line or their tenants’ experiences.
Common Problem Areas in Rental Homes
Average utility rates have trended upward, pushing families to seek out low-cost, eco-friendly ways to reduce their consumption. Sometimes, you don’t need elaborate methods to reduce cost. The cause of your high bills and rising utility costs can be done with simple corrections in the house itself.
The first step to achieving cost-saving results and improving the overall efficiency of everyone involved will be identifying the most common causes of high energy bills.
Aging and Inefficient Appliances
Refrigerators, water heaters, and HVAC equipment older than twenty years require much more power (electricity and/or gas) to perform their standard function compared to newer units labeled ENERGY STAR rated.
A twenty-year-old HVAC system can account for approximately fifty percent of a home’s energy consumption. Therefore, replacing an HVAC unit should be the top priority when considering upgrades.
Poor Insulation and Air Sealing
Leaks in windows, doors, attics etc., cause heated/cool conditioned air to escape, forcing heating and cooling systems to continuously operate to maintain temperature, thus wasting a great deal of energy. Properly insulated buildings serve as a thermal blanket for the building and help to stabilize indoor temperatures and reduce heating/cooling system operation.
Inefficient Lighting and Fixtures
There are many homes still lit with incandescent light bulbs or halogen fixtures, which produce excessive amounts of heat and consume much more electricity than LED lighting. Old shower heads and faucets also waste thousands of gallons of hot water each year. All this causes rising utility costs. Replacing these fixtures will provide you with almost instant savings and will cost very little.
However note that these changes are impossible or difficult without a proper budget for utilities and maintenance. Therefore, landlords should allocate money monthly for frequent repairs or upgrades to maintain property value.
The Role of Proactive Property Management in Maintaining Utility Costs
Property managers can control their client’s (the landlord) utility bills through a pro-active strategy for managing utilities as well as by being an educator/auditor of the tenant’s utility costs. The first step in this pro-active approach is auditing, followed by education and then upgrading in order to save money for both parties.
1. Conducting Regular Efficiency Audits
Energy audits provide insight into areas where energy is being wasted; e.g., duct leaks, poor insulation, etc. Therefore, the data from the energy audits can be used as a basis for identifying areas that would most effectively reduce energy usage with the least amount of capital investment. If done well, this should provide the greatest return on investment in terms of reduced energy consumption over time.
2. Investing in Strategic Appliance Upgrades
Proactively replacing all of the old HVAC units, water heaters, and refrigerators (and installing new ones that are Energy Star) will reduce the amount of energy being consumed by the entire building.
The replacement cost is usually high, but it also decreases operating costs for the building owner, creates more appeal to potential renters. Additionally, it may allow the landlord to charge a higher rent as preventing rising utility costs means less utility bills.
3. Implementing Submetering and Clear Billing
By installing submeters on each unit, the renter is billed only for the amount of utilities consumed by that unit, encouraging efficiency in usage. In addition, you should work with a local Philadelphia rental management company to help tenants understand their consumption in real time.
These professionals will use modern technology and online portals, ultimately increasing accountability for usage and decreasing disputes over shared or complimentary utility bills.
4. Educating Tenants on Eco-Friendly Habits
Providing new tenants with an easy-to-use resource for how to set thermostats effectively, save water, and turn off electronic devices using a power strip helps new tenants lower their own bills.
This education also helps the manager be seen as a supportive partner when it comes to reducing living expenses, which can help build tenant satisfaction and help the tenants work better with the manager.
5. Performing Preventative Maintenance
By regularly maintaining the HVAC units and checking for leaky pipes and clogged air filters, the equipment will operate efficiently. This will also prevent small problems from becoming big repairs and prevent large amounts of energy being wasted by a struggling heating or cooling unit.
6. Tracking and Reporting on Utility Performance
Utility consumption data (usage by property and over time) can be used to identify unusual spikes in consumption that could indicate a leak or equipment malfunction. Reporting usage trends to owners and reporting savings resulting from utility-related upgrades provides evidence of the cost-savings from being proactive about managing utility usage.
Conclusion
Rising utility costs are a common problem; they can also be an opportunity to work together. Landlords can help prevent waste by finding inefficiencies in their buildings, and proactively making improvements.
Working together with a skilled property management team turns the burden of rising energy costs into a tool to promote stability for all parties involved in the rental process. This cooperation will lead to lower costs, lower consumption of resources and create a more environmentally friendly rental operation.
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