FAQs: Water Charges in Tenancies

Property Management,  Property Managers

The Property Management Support Service (PMSS) team fields up to 100 calls a week from REIQ members seeking clarity on certain topics – with water usage the trending topic of late. Have a topic you’d like us to cover in an upcoming edition of the PM Update? Email us at pmsupport@reiq.com.au!

Full water usage (including the bulk water charge) can be passed onto the tenant if all of the below conditions are met:

 

Q: Is it law that the owner must provide a certificate from a plumber stating the premises is water efficient?

A: No, it’s not law. However, having this evidence is best practice to help minimise disputes. If the tenant disputes paying for water usage on the basis the property doesn’t meet the water efficiency requirements, the onus is on the lessor to provide evidence that it does. This evidence could include receipts for the plumbing fixtures installed in the property, although a plumber’s certificate stating the property meets the water efficiency requirements is the most ideal piece of evidence if the disputes escalates to QCAT. Our recommendation is to provide a copy of the compliance certificate with the Form 1a Entry Condition Report.

 

Q: Should the owner have a new compliance certificate completed for each new tenancy?

A: As mentioned above, a plumber’s certificate is not law but a best practice recommendation to help minimise disputes. Best practice would be to have a plumber’s certificate for a new tenancy if you have taken over the management and don’t have a full history of the maintenance performed or the entry and exit condition reports. The relevant plumbing fixtures may have changed from when the plumber’s certificate was originally issued and if the tenant challenged the validity of the plumber’s certificate, you wouldn’t have the evidence to support there had been no changes to the premises from when it was issued.

Conversely, if you’ve been managing the property and there have been changes to the relevant plumbing fixtures from when the water compliance certificate was issued then it would be advisable for the owner to obtain a current certificate for the commencement of the tenancy.

Best practice tip: Negotiate with the plumbers who work on your rent roll to include a regular compliance check when they’re attending to other plumbing work at a property.  Ask them to incorporate a statement on the tax invoice stating that the property still meets the water efficiency requirements.

 

Q: If an owner doesn’t pass on the water usage charges during the billing cycle, can the tenant be invoiced for water usage for an extended period?

A: If the water usage charges are relevant to the tenancy period for the tenant, then yes they can be invoiced. The issue however is if they choose not to pay the invoice and the dispute progresses to QCAT, as it would not be viewed favourably that the owner did not pass on the water usage charges in the relevant billing period. Section 362 of the RTRA Act requires a lessor to mitigate the loss to the tenant so by the owner not passing on the water usage charges at regular intervals to the tenant, they’re seen to not be mitigating the loss to the tenant. It makes sense for the owner to pass the water usage charges on immediately so the amount can be budgeted to be paid by the tenant within the required 30 day period.

Best practice tip:  If the owner re-directs their water accounts to your office for payment, make sure you have them sign your new management checklist to verify this is their responsibility. If your agency offers a service for managing the payment of these types of accounts for the owner, you can charge a fee for service which would need to be stated on the PO Form 6. If owners pays the water invoice themselves when it’s the billing period for the relevant properties, include a reminder on the rent statements for the owners to provide the agency with the invoice for water usage and send an automated text and or email to owners as a reminder also.

 

Q: If a property has a separate water meter although doesn’t meet the water efficiency requirements can the owner still charge for water usage?

A: Yes, the owner can charge for ‘excessive water’ usage, although not all water usage as they must provide a ‘reasonable’ amount of water. You would still tick the yes box for Item 12.2 of the Form 18a General Tenancy Agreement, although you would include a special term which states how many kilolitres (kLs) of water are provided for usage by the owner and thereafter the responsibility of the tenant/s to pay water usage charges over this amount.  Please note: Real estate agents cannot draft special terms unless legally qualified to do so. Although the owner could provide a special term, our best practice recommendation is for this special term to be legally drafted.

RELATED: What’s so ‘special’ about special terms?

 

Q: What is a reasonable amount of water?

A: There is not a statutory requirement, although Section 169 of the RTRA Act states what the tribunal must take into account if there is a dispute. A good starting point is to find out the average water usage from the water provider for the area the property is located.  You will then need to take into account the other aspects stated, and ensure the PO Form 6 signed by the owner nominates the kLs provided by the owner.

(4) In deciding an amount payable by a tenant for outgoings for a water service charge, the tribunal must have regard to the following—

 

        (a)relevant available information about water usage and charges for premises in the local government area in which the relevant premises are situated;

 

        (b)the area of the relevant land;

        (c)any terms of the agreement affecting the amount of water used;

        (d)the presence or absence of water saving devices in the premises;

        (e)the number of persons occupying the premises;

        (f)the quantity of water for which the lessor should reasonably be liable;

        (g)anything else the tribunal considers relevant.

 

Best practice tip – water usage disputes start with setting up the PO Form 6 correctly and the expectation management and education with the owner.

  1. If the property has a separate meter and it meets the water efficiency requirements, make it a requirement when engaging your management services for the owner to pay to have a plumber’s certificate so the tenant can be provided with evidence with the Form 1A Entry Condition Report.
  2. If the property has a separate water meter but doesn’t meet the water efficiency requirements, ensure you tick the second box of the Realworks PM Schedule, Item H and include the agreed kLs the owner will pay for. The Form 18a General Tenancy Agreement will then need to include the relevant special term as per these instructions.

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