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Understanding Utility Flat Fees: What Tenants Need to Know

Renting in British Columbia often comes with a mix of responsibilities, and understanding your lease agreement including your Utility Fees are key. One area that can sometimes be confusing is how utilities are handled. While some rentals include utilities in the rent, or require you to set up accounts directly with BC Hydro or FortisBC, others use a “utility flat fee” system. Let’s break down what this means for you as a tenant.

What is a Utility Flat Fee?

A utility flat fee is a fixed amount you pay to your landlord on top of your base rent each month to cover some or all of the utilities used in your rental unit. This is in contrast to having the utility bills in your own name and paying the utility company directly based on your actual usage.

Common utilities covered by a flat fee include:

• Electricity: (BC Hydro)
• Natural Gas: (FortisBC) – Often for heating, hot water, or cooking.
• Water: dependant on the municipality
• Sewer:
• Garbage/Recycling: dependant on the municipality

Important Note: Cable TV and internet are never included in a utility flat fee and are always the responsibility of the tenant to arrange and pay for.

Is a Utility Flat Fee Legal in BC?

Yes, if it is clearly stated in your tenancy agreement and complies with the Residential Tenancy Act (RTA). The agreement must specify exactly which utilities are covered by the flat fee. If it isn’t in writing, it’s not enforceable.

How and When Can a Landlord Increase a Utility Flat Fee?

This is a crucial point for tenants. Under the RTA, landlords cannot arbitrarily increase a utility flat fee during the term of a fixed-term lease.

For month-to-month tenancies, a landlord can increase the utility fee, but only if they give you proper written notice using the prescribed form, and the increase aligns with the regulations for rent increases. Here’s what to keep in mind:

1. Proper Notice: Landlords must provide three full months’ notice of any rent increase.
2. Annual Limit: Rent increases in BC are capped at a percentage determined annually by the government. The utility fee increase, when combined with any increase to the base rent, cannot exceed this annual limit.
3. Calculation of the Increase: The landlord should be able to justify the utility increase with data. If their own utility bills have increased, then they can show that to the tenant and justify why the fixed rate is no longer sufficient.

Benefits of a Utility Flat Fee (From a Tenant’s Perspective):

• Predictable Budgeting: You know exactly how much you’ll pay for utilities each month, making budgeting easier. No surprise high bills in the winter!
• Convenience: You don’t have to set up accounts with utility companies or worry about paying bills separately.
• Potential Savings (Sometimes): If you’re a low-usage tenant, you might pay less under a flat fee than you would if you were paying for your actual consumption.

Key Takeaways for BC Tenants:

• Utility flat fees are legal in BC if they are clearly outlined in your tenancy agreement.
• Landlords must provide proper notice and adhere to annual rent increase limits when increasing utility flat fees.
• Tenants have the right to dispute unfair or unreasonable utility flat fees.
• Always keep a copy of your tenancy agreement and any communication with your landlord regarding utilities.

Pemberton Holmes was rated the #1 Property Management company in the Greater Victoria Area. If you have any questions regarding the process of renting out your property, give us a call. One of our licensed managers would be happy to assist. 250-478-9141