Landlords warned against sharing utilities between main house and granny flat

Landlords warned against sharing utilities between main house and granny flat
Jennifer DukeDecember 7, 2020

Building a secondary dwelling, either on a principal place of residence or out the back of a rental property, for tenants to live in has long been an accepted way of increasing rental yield on applicable homes.

With double the income from one block, the $80,000 to $120,000 outlay to build a granny flat has been undertaken in many areas, in particularly Western Sydney.

However, the Tenants’ Union of Tasmania’s solicitor, Peter Foster, is warning Tasmanian tenants about some of the difficulties.

The main issue remains around the subject of electricity or power connection. Even if the landlords live in the main house, or it is holding tenants itself, it’s advised to have separate meters.

Not only will this make life easier in terms of bills, however not keeping this separate may actually be unlawful under the Act, explains Foster in the latest TUTas advisory email.

“Some owners will insert clauses into leases that seem like a fair compromise. For example, that each household pays half of the power bill. But is going halves just when only two tenants live in the flat while the owner, her husband and three children reside in the adjacent house? It would be reasonable to assume the owner and her family will be consuming more electricity,” writes Foster.

He suggests that there may also be some arrangements where there’s a “per head pay share” where each tenant pays for a divided portion of the bill per person. However, lifestyle imbalances can affect the bills and still have some paying more than they should.

When assessing ‘fairness’, clearly there are many difficulties. The Act is even clearer. Foster explains that the landlord is only able to charge for rent, damage and usage costs of a water bill under the agreement, but that all other charges cannot be collected by the landlord or agent. This would include electricity bills.

The solution may be to have a meter installed at the granny flat. While ne notes that owners have no legal obligation to install the meter it certainly seems the most recommended option.

How have you tackled this issue with your tenants?

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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