As the price of utilities continually rise throughout Australia and tenancy laws are becoming harder for investors to on-charge the costs of water usage to their tenants, many strata communities are implementing individual water billing arrangements to ensure their owners are being charged more fairly. There are two common methods of billing for water in strata communities. Per lot entitlement or individual meter readings. Both methods are further explained below.
Lot entitlement water billing
This system is typically implemented by communities that either don’t have individual water meters for each lot or one that the local city council refuse to read the individual water meters. The local city council will obtain readings from the bulk water meter which records usage for the entire site (including common property) and issue bills to the individual lot owners with a portion of the bulk usage which has been calculated as per their lot entitlement. If your community uses this method of billing, a single person may be paying the same amount for water as the family of five, two doors down, depending on their lot entitlement.
Individual water meter billing
Communities that do have individual water meters installed are preferring to implement this fairer, user pays, form of billing. The individual meter readings are obtained from each lot by either the local city council or the strata committees nominated utility billing administrator (SAS for example) and the bills are issued to each owner accordingly. Typically, the strata committee will take over responsibility of the bulk water account which will continue to be billed by the local city council and the committee will pay for the entire site’s usage up front. The recoveries from the owner’s individual bills will then be returned to the committee to cover what they have already paid to the council (same as any other bulk utility arrangement). This system ensures that everyone is paying for exactly what they have used and may even help to create a more environmentally conscious community.
SAS have assisted many communities make this transition and note that the following should be kept in mind and considered by everyone before making the change.
- When water is billed through the local city council it is GST exempt as per Australian Tax law HOWEVER if your strata community is registered for GST and you implement an individual water billing arrangement then it will have to be applied to all owners water bills moving forward.
- There is chance that some lots may have a leak. Once the individual meter readings are obtained and comparisons/monitoring begin, it may become apparent that some lots have a possible leak. This point should be raised and discussed at a committee meeting to ensure everyone is aware that this is a possibility and actioned accordingly.
- The possibility of bad debts. As with any bulk billing arrangement the strata committee are exposed to the possibility of incurring bad debts from owners not paying. This is another matter that should be discussed to ensure everyone is aware that this is a possibility of implementing an individual billing system.
- Owners will still be responsible for the bills issued for their lot. Although bills will now be issued as per the individuals lot usage, the owner will still ultimately be responsible for payment of the bills. This system will simply make it easier for the owner to on-charge the water costs to their tenant.
If your strata community is thinking of making the change to an individual water billing system please feel free to contact SAS to further discuss the pros and any concerns you may have by phoning 07 3010 5560, emailing us at firstname.lastname@example.org or by clicking here for a free review of your electricity.