How to Do RUBS When You are in a Rent Control Area

Ratio Utility Billing In Rent Controlled Areas

As a landlord or property manager, you have many considerations to take into account in order to effectively manage your properties, especially when you manage multiple properties. Utility billing processes simply add to the plethora of other things you have to accomplish. Implementing an automated billing system can significantly help to simplify these processes. Additionally, covering utility expenses yourself can be rather unpredictable, as the actual utility consumption will fluctuate. If your tenants have no reason to monitor their energy consumption, they won’t. Implementing the ideal utility billing system can help to keep your expenses regulated and predictable. These services can help to encourage tenants to practice energy conservation techniques, which will help them feel like they have more control over their expenses and is better for the environment. However, when your property is located in a rent control area, it can be somewhat more complicated to implement a utility billing system, but it is possible, as long as you follow the appropriate measures and laws in your state.

What is a RUBS?

RUBS stands for ratio utility billing system. This is a process that takes the overall utility expenses and distributes them based on a variety of factors. It is possible to mix the percentages and factors to determine the most fair utility bill distribution for your tenants. Our experts can advise you regarding the ideal distribution method for your situation. Some commonly used factors include the number of rooms in a unit, the total number of tenants, and the square footage of the unit. These can also be used for different utility bills. For example, it is likely better to use the number of tenants as a factor for the overall water use in a unit. However, it may make more sense to use the number of rooms or size of the unit when allocating gas-related expenses. Implementing the ideal RUBS can help ensure a fair method for utility bill distribution, without requiring the initial installation costs that are associated with submetering.

The Benefits of Automated Utility Billing

There are many benefits to implementing any kind of automated utility billing system to your properties. These systems can help to minimize the amount of time that you have to spend handling utility billing processes. Automated utility billing systems can help improve tenant satisfaction, as well, because they ensure that tenants feel as though they have more control over their relevant energy expenses. This also prevents any fluctuations in your relevant expenses, because it will prevent you having to pay for any unexpected variations in energy use. Automated utility billing systems are beneficial for your tenants, the environment, and your wallet. There are many options for automating your utility billing processes. The most popular options include RUBS and submetering processes.

Using RUBS in a Rent Control Area

Though you know all of the benefits of utility billing automation, it can be difficult to implement these processes when your building is located in a rent control area. There are much stricter laws regarding these areas, especially if you have previously been responsible for paying the utility expenses. When you wish to transfer the utility expenses to your tenants, it will be important to familiarize yourself with the laws in your area. In general, you will be required to reduce the rent by an amount proportionate to the average utility expenses. This rent reduction rate should be based on the total average monthly cost of the utilities to the landlord over the prior 12 months. These costs should then be distributed between affected apartments. The ideal amount can be determined by using this formula:

Rent reduction=(a*u)/(t*12)

In this equation, the a stands for the annual utility bill, while u is the utility use factor for apartment size. This can be determined by using a special audit or by using the standard formula, which uses the following values to determine the utility use factor:

Number of BedroomsUtility Use Factor
01.0
11.2
21.4
31.6
41.8
52.1

 

The t in the equation stands for the total use factor. This is a summation of all the utility use factors for all of the rental units that were occupied for at least 9 of the previous 12 months. After this has been determined, you can figure out the necessary rent reduction that will allow you to transfer utility bill responsibility to your tenants. Keep in mind that laws fluctuate between states and areas, so it is important to ensure that you are following all of the proper procedures to implement a RUBS to your property.

Submetering in a Rent Control Area

Submetering is another option for implementing automated utility billing. As is the case with a RUBS, you will be required to reduce the rent by the average cost of each tenant’s utility use. This allows you to provide a more accurate estimate for rent reduction for each tenant. However, submetering does require the use of metering equipment. In most cases, the metering equipment will have to have monitored the tenant’s utility use for 12 consecutive months to ensure an accurate average.

Providing Appropriate Notice

No matter what utility bill automation system you decide to use, it is important to ensure that you provide the appropriate amount of notice to your tenants. As was previously mentioned, the laws fluctuate between states, so it will be necessary to find out the amount of time and relevant notice you have to give to tenants before you can shift the responsibility for utility bill expenses to them.

There are many reasons that you should consider implementing an automated utility billing system to your properties. This can be somewhat difficult in a rent control area, but it is still possible and is still worth consideration. Our experts can help you determine the ideal energy solutions for your specific property and situation. To learn more about automated utility billing and how it can benefit you, contact us at Vitality Energy today!

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