By Dominique Jarry-Shore | Tue Feb 01 2011
With several cold snaps already behind us, renters may be wondering whether it’s better to have their heat and hydro included in the rent or pay it separately.
There are pros and cons to both.
When heat is included budgeting can be easier with set costs every month. This can be especially helpful where roommates are concerned since divvying up heating bills from month to month is an extra hassle. It also protects you from rising energy prices, since the amount of rent you pay will likely stay the same or rise by only a small amount, as set out by the Landlord and Tenant Board.
This year, the rent increase has been set at less than 1 per cent, and although landlords can apply for a rent increase over and above that amount .
If you’re planning on staying in your apartment for several years, it could be more advantageous to have the heat included because annual rent increases will likely be less than the increase in energy costs.
The drawback to having the heat included is that you have less control over how much you pay for it. If you’re someone who is good at saving on heat, and generally has a small heating bill, you could end up paying more than your consumption when it’s included in the rent.
Stuart Henderson is a member of the Ontario Landlord’s Association and a small-business landlord who owns about 50 rental units.
He says landlords will often adjust the amount of rent a tenant pays when the heat is included to account for a tenant who might waste energy. Even if you aren’t the type to leave the window open in the middle of winter, your landlord may have factored that kind of wastefulness into the price as a precaution.
Henderson says a more worrisome concern is rising energy costs and that uncertainty means many landlords are wary of including utilities in the rent.
He calls the 10 per rebate on hydro bills introduced by the McGuinty government a “very small help” and estimates costs for landlords have gone up 10 to 20 per cent in recent years due to a combination of factors, including the HST, the increase in the cost of energy, and in some areas, rising property taxes.
With the rent increase set at 0.7 per cent for 2011, Henderson says landlords are more and more willing to negotiate a rent that doesn’t include utilities.
This is where it can get interesting for renters.
By comparing similar units in the neighbourhood, renters may want to try bargaining for a lower rent in exchange for paying the heat themselves.
Here are some tips for negotiating a better deal on your rent where heat and utilities are concerned.
1) Compare apples to apples. Take some time to research the prices for similar units in the neighbourhood both with heat included, and excluded from the price. That way you’ll have a better starting point when bargaining. Craig’s List and other online housing sites can be a good place to start.
2) Find out how is consumption is measured. Sometimes heat is included in the rent because it’s not possible to determine the exact consumption in your unit. This is especially true in some older townhouses where one heating system may be used for a couple of units. Find out how exactly your consumption will be measured to make sure it’s fair. If this seems suspect, you might want to skip offering to pay your own utilities.
3) Check the energy efficiency of the apartment. Are the windows winterized? Which was does the apartment face? Keep in mind that a basement will cost more to hear than a top floor apartment.
4) Find out who you’re you dealing with. You’ll probably have more of a chance negotiating a rent with a small-business landlord as opposed to a large company-managed building where rules may be less flexible
Dominique Jarry-Shore is an editor with thestar.com. She lives in an apartment in downtown Toronto.