Why do Landlords Have to Pay for Tenants Water & Council Rates?

[Prakman]

Hello Fellow Forumites,

I hope that some very smart members can explain why we (investors) have to pay for the tenants rates. I know that its tax deductable, but still...

They throw away the rubbish and local coucil collects- they should pay the coucil rates.

The sewerage is connected for them- why are we paying for this?

Any light shed on this topic will help me smile when I pay the next rates.

Have a great day!!

 

[alexlee]

Try not paying them and argue in court that you shouldn't have to pay them. Let me know how you go.

Seriously, there are things you can change and things you can't. Don't waste your time thinking about things you can't change. The law is the law. I don't know why I have to pay taxes either, but there you are.

If the tenants paid it, it wouldn't be deductible to them. So think of it as you taking money from the taxman's pocket for the good of everyone who rents. Feel better?
Alex

 

[coolie21]

think of it as you taking money from the taxman's pocket for the good of everyone who rents. Feel better?
Alex

Why would that make anyone feel better? Should we pay their electricity as well?

 

[alexlee]

Why would that make anyone feel better? Should we pay their electricity as well?

Doing your bit for the good of humanity, so to speak. I think people should pay MY mortgage. I'm sure that'll make someone feel better! (I'm hoping you can read the sarcasm here.)

I don't like paying rates either. But if that's the cost of being in the investment game, I'll pay it. I don't like a lot of things: stamp duty, land tax, etc. But then I look at the appreciation in my properties and think, who cares.........
Alex

 

[hobo-jo]

Pretty sure I've read a post from Xenia saying that in SA we can write the water rates into an agreement where tenant pays. I wholeheartedly agree that the tenant should pay water rates, especially considering that it is just another utility and considering how valuable our water resources are (user sees cost, maybe reduces use). Water rates should also be based around a user pays for amount used system as opposed to using property value, etc.

Council rates on the other hand...I tend to think should be the owners responsibility.

 

[WinstonWolfe]

Prakman, it is a fair question. Try these for answers:

- sure, council facilities are utilized by the tenant not the owner, on the whole. So, why don't you advertise for a tenant prepared to pay your rates..... if you don't get one, then you'll know why landlords pay.

- the other side of it is that some tenants only stay for a few months, or 6....so how you going to split the rates if you only get the notice once a year?

- further, many tenants are at the extreme end of the earning capacity scale and can't save for the life of them.....try and hit em for a lump sum....


At the end of the day, if you don't think your yields out of PIing are high enough after paying rates, invest in something better.

 

[Prakman]

Dont get me wrong, I think that PI is a great vehicle for wealth creation. It always has been and always will be.

I believe that if you use something, you pay for it. That to me is fair. The council and water supply is to the benefit of the tenant rather to mine.

Can anyone recall a partition signed to lobby the goverment to change the policy of LL paying?

Just food for thought.

 

[Dazz]

I hope that some very smart members can explain why we (investors) have to pay for the tenants rates. I know that its tax deductable, but still...

Any light shed on this topic will help me smile when I pay the next rates.

.....because legislation known as the RTA specifically designates it so.

As you are from WA, the legislation goes something like this ;

"The OWNER shall bear the cost of all rates, taxes or charges imposed in respect of the Premises under any of the following Acts : Local Govt Act 1960, Land Tax Act 1967, any written law under which a rate, tax or charge is imposed for 'water services' as defined in the Water Authority Act 1984, other than a charge for water consumed."

There is no negotiation available. The Landlord must pay for these imposts if the Premises are zoned residential and cannot by law pass these onto the Tenant.

The root cause of why the legislation states this ?? I think it might have something to do with the Tenant Union jumping in during the argy-bargy and defending tenants when the RTA was drawn up initially. Like any meeting, if you aren't strongly represented...or maybe not even at the meeting....you cop all of the bad stuff. Who knows if a Landlord's association were even present or consulted when it was drawn up. I'd be extremely interested to find out which exact bodies or groups were involved when the legislation was drafted and haggled over. All I can say is from a Landlord's perspective, the legislation is very lop-sided. You obviously think so as well, otherwise you wouldn't have posted the question.

As someone mentioned previously, if you don't like the rules of the game, your only choice is to play a different game. Simple.

 

[steveadl]

Pretty sure I've read a post from Xenia saying that in SA we can write the water rates into an agreement where tenant pays. I wholeheartedly agree that the tenant should pay water rates, especially considering that it is just another utility and considering how valuable our water resources are (user sees cost, maybe reduces use). Water rates should also be based around a user pays for amount used system as opposed to using property value, etc.

Council rates on the other hand...I tend to think should be the owners responsibility.

Yes you can. Just re-let one of my IP's to a new tennant for an increased rent, and they pay for ALL water incl. quarterly supply charge.

 

[grossreal]

hi Prakman
just a little bit different.
as a rule the tennant pays everything including painting in a commercial.
and with some leases land tax in nsw.
and if you have a ratchet in the lease ( which you can't in a resi, ratcheting rental is illegal in nsw for resi's not sure about the other states)
if you ratchet the lease and the lease includes the out going form part of the lease even thou the out goings don't go up
the lease does
so you are leverage something that has not moved.
so your income increase that little bit more.
be interesting to see how you incorporate the resi cost if the property is leased on a 3 x 3 say to a corporate so it would be a resi property with a commercial lease maybe some one has done one.
I am sure that the bennelong would have resi with a commercial lease attached.
just some thing to think about.

 

[Mrman]

For my IP it is stated in the lease that up to a certain amount of water usage(can't remember the exact figure but it is about the average use for a house), the landlord will pay and anything above that will be charged to the tennant.

Sure you still pay but at least you know you won't get ripped off.

George

 

[TheBacon]

Yes you can. Just re-let one of my IP's to a new tennant for an increased rent, and they pay for ALL water incl. quarterly supply charge.

Yep I agree.

I guess the assumption is there that your costs are ALREADY factored into your rents.

If costs increase then that needs to be reflected in the rent you charge your tenants. For example if water rates go up $100/yr then perhaps you should put rent up by about $2/wk to cover this?

TB

 

[Bazza]

We put a special clause in our Tenancy Agreements:

Due to water restrictions and increased water costs, water will be charged at cost if usage exceeds 120kl in a six (6) month period.

The Gold Coast City Council has said that they want the household limit to be 600l per day which is 109.5kl per six months. So, I think this is fair enough - user/waster pays.

Cheers,

Bazza

 

[Propagate]

We are tenants ourselves at the moment, and we have to pay all the water bill - which is fair enough I think. We're in Melbourne.

On our house in the UK, the tenant pays EVERYTHING - including taxes. We only pay our mortgage payment and buildings insurance.

 

[alexlee]

Yeah, the council rates are a shocker in London. And that damn TV license. Not that I paid it.
Alex

 

[Norwester]

Tony & Emma,

You are only required to pay for the water and sewerage volume charges................

If your bills have anything on them relating to service charges, speak with your supply authority.

ciao

Nor

 

[Xenia]

Pretty sure I've read a post from Xenia saying that in SA we can write the water rates into an agreement where tenant pays. I wholeheartedly agree that the tenant should pay water rates, especially considering that it is just another utility and considering how valuable our water resources are (user sees cost, maybe reduces use). Water rates should also be based around a user pays for amount used system as opposed to using property value, etc.

Council rates on the other hand...I tend to think should be the owners responsibility.

Hobo Jo, it is the water usuage that the tenants pay if there is a clause in the contract not the sewer or connection rates! I can see the arguement here and agree with it. However council and water connection rates are payable by the owner of the property not the tenant and they have to be paid even if it is a vacant block of land with no water usuage or rubish to be removed! That's government for you

 

[Peter_Tersteeg]

Here's an argument, it could be complete rubbish, but worthy of thought...

As a landlord you are obliged to provide essential services to your tenant. The tenant has the option of using water from the tap, but it's considered essential that they at least have access to it. Hence you pay water rates and (in most states) the tenant pays for useage.

The tenant has to be able to access the property, so the local roads and other local services need to be in good order. Council rates pay for this.

The same argument applies to telephone and electricity. You pay to have the wiring for both serivces available to the tenant. They don't necessarily have to turn them on, but as the landlord you are obliged to give them to opportunity to use these services if they want it.

If the stove breaks, you have to replace or fix it in a reasonable space of time at your expense (ignoring malicious damage). I've known tenants who order takeaway constantly, but you've still got to let them use the stove if they want to.

It's kind of a wierd argument. I also wish landlords didn't have to pay these expenses, but we do.

 

[willfong]

Does it matter who pay for it first? The fact that landlords have to pay for those have been factored into the market rental price. If the tenants have to pay them then they will take that into consideration when deciding how much to spend on rent and the landlords will similarly reduce rent expectation because of less outgoings.

 

[Propagate]

Tony & Emma,

You are only required to pay for the water and sewerage volume charges................

If your bills have anything on them relating to service charges, speak with your supply authority.

ciao

Nor

Thanks for that, I'll check the bill when it comes in.

Ta.