Many Landlords Consider Billing Tenants For Utilities via RUBS Program
As the cost of utilities continues to rise for LA landlords, many owners are considering the implementation of a Ratio Utility Billing System (RUBS). RUBS is a way for Landlords to manage their expenses by proportionately sharing utility costs with their residents. While RUBS is not without its critics, many landlords have found it to be an effective way to manage rising utility costs.
Utility Costs Surging
SoCalGas bills up 3x: Natural gas prices in California have increased significantly in recent months, driven by factors such as extreme colder weather events, supply chain disruptions, and an overall increased demand. SoCalGas, the largest gas utility in California, has warned its customers that bills for 2023 could be up to 3x higher than last year due to surge in prices.
LADWP not far behind: Not to be outdone, in 2022 The Los Angeles Department of Water and Power implemented rate adjustments on water usage, a move that has lead to higher bills for many customers. The change went into effect in January 2022 and primarily impacts residential customers who are the highest water users. LADWP uses a four-tiered pricing structure based on usage to determine the rates a customer pays for water.
Benefits of RUBS
RUBS typically proportionately divides water, sewer, trash, electricity, gas, or pest control utility costs among residents using a formula based on several factors including state and municipality regulations, size of units, and the number of occupants in each unit. Some of the benefits are as follows:
- Tenant Cost Absorption: Tenants absorb the costs of their utility consumption as opposed to the landlord.
- Fair Cost Distribution: Utilitycosts are divided on an individual basis, making the process more equitable for tenants.
- Increased Net in Operating Income: Utility consumption contributes to a decrease of Operating Expenses leading to an increased Net Operating Income.
California does not currently have any laws that prohibit the use of RUBS and there are many companies that you can employ to implement RUBS at your property. Additionally, there are also programs which can be purchased to independently implement RUBS.