If you own a single-family residence with utility usage that is separate from the other properties in the area, the way in which your tenants are charged for utilities is straightforward and unaffected by any nearby residents. However, if you’re in charge of multiple units within a single building, such as an apartment or condo complex, the way you allocate utility usage is more complicated. There are a few ways to go about charging utilities as a landlord in a complex setting, but one of the most common and effective is the ratio utility billing system.
What is a Ratio Utility Billing System? A ratio utility billing system, or RUBS, is a way of calculating what each tenant in a complex is responsible for paying in terms of utilities, as most units in an apartment or condo complex don’t have their own ways of reading individual water or energy usage.
How Is the Ratio Utility Billing System Determined?
Total utilities used by the complex are recorded on a monthly basis, and what each tenant is responsible for is decided based on factors like the square footage of each unit, how many people live there, and the number of bedrooms and bathrooms.
This information is collected to try to make each tenant’s utility billing as fair and accurate as possible. Depending on the complex and its amenities, landlords might take other factors into account as well, and different factors are weighed more heavily than others when measuring specific utility usage.
When it comes to determining gas and electricity usage throughout the units in your building, the most important factor to take into account is the square footage of each unit.
The larger the unit is, the more energy it takes to heat or cool. Additionally, units with more windows than others will also likely require more energy, unless they use energy-saving curtains or other reinforcements.
When calculating fair water costs for each unit in your complex, it’s more accurate to count the number of people living in each unit (and using water on a regular basis) than it is to use square footage information. No matter how big a unit is, it’s safe to assume that a 2-person household is using more water than a single tenant.
Many landlords will also take into account the number of water fixtures in each unit, as a unit with more water fixtures is likely to cause more strain on the building’s water supply.
If your apartment or condo complex offers shared spaces such as a gym, a rec room, or a patio, the responsibility for utility payments is shared between all of the tenants as well as the landlord.
According to the typical ratio utility billing system layout, landlords will pay roughly 20% of the utility costs in common areas, and the remaining 80% will be split up evenly between all of the building’s tenants.
What Are the Benefits of a Ratio Utility Billing System?
RUBS has many benefits for landlords as well as tenants of a condo or apartment complex. For landlords, collecting utility payments in this way is more convenient than tracking the specific usage of every single unit, which is tedious and even impossible in some complexes.
The RUBS method also encourages a sense of community among tenants in a complex. Though details like square footage and the number of tenants in each unit will be taken into account, everyone’s utility usage still affects everyone else to a certain degree. Therefore, tenants throughout the complex are likely to be more conscientious about their own utility usage.
Since every tenant is responsible for a portion of the utility costs of shared spaces within the building, it encourages regular use of those spaces and therefore a greater sense of belonging and participation among neighbors.
How to Introduce RUBS to Your Tenants
If you’re interested in implementing a ratio utility billing system, the best way to get your tenants on board without issue is to be as forthcoming as possible throughout the process.
Make sure to provide every tenant in your complex with at least 30 days’ notice of the change. If possible, follow up with personal phone calls to explain the details of this new policy.