At Livable we provide utility management and cost recovery solutions for commercial and residential properties. Although you can't regulate the rates, you can take steps to keep costs at a minimum. In the fall of 2020, over 7 million in California were filing jobless claims since businesses began closing in March, many moved in with loved ones to save money or left the state altogether.
At the time demand was trending differently in different markets, but it’s safe to say that many owners felt the squeeze of dropping rents and rising vacancies. As restrictions continue to be ever-changing it might be tempting to include utilities in the monthly rent in an effort to attract renters. We would argue that such a short-sighted plan could cost owners A LOT in the long run.
As we all know, utilities are not fixed costs. In fact, they tend to go higher and higher over time. So, including utilities in the rent is a losing proposition in the long term. This is especially true in rent-controlled markets where owners may not unilaterally change the terms of the lease after it has begun. If utilities are included at the start of the lease, they can never be made the tenant’s responsibility no matter how long they stay in the unit.
This long-term losing trend is compounded while people are still working, cooking and largely spending their days at home since 2020. With homeschooling becoming more and more popular with Covid-19 worries there are more people in more homes all day long, using precious resources like water, creating more garbage and recycling, and constantly charging their devices.
In California, year-over-year residential energy use is 15 to 20 percent higher since shelter-in-place restrictions went into effect, according to the California Public Utilities Commission. That figure came out well before an August 2020 heatwave, which broiled the West and put so much additional demand on the system that rolling blackouts returned to the state for the first time in years. In Arizona, the demand was so high that the utility service there asked residents to curtail their usage during peak hours.
Livable understands property owners may have had difficulties since 2020 finding tenants. We urge you not to include utilities in the lease as a short-sighted incentive to new tenants. What seems like giving a little right now will quickly turn into a lot down the line.
Book a call with a Livable team member to learn more about how we promote conservation through billing and education and how you can make tenants more responsible for their usage.
Do you have an older furnace? You can actually contribute to making it more efficient by hiring a professional annually to service the unit - this involves cleaning the parts you can’t see or reach and making sure it isn’t working harder than it has to. You should replace filters every three months (more if you’ve done renovations or have pets) as this ensures air moves easily into the unit and also prolongs your furnace's life