Reimbursement of utilities (water / electricity) to a lot owner
Sub-metered reimbursement.
Introduction
Some strata schemes do not have a separate common supply meter for water and electricity. At the time the scheme was developed, common services may have been connected to a particular lot supply, which is a cost-saving for the developer but is less than ideal for the owners. This may result in driveway lights or reticulated common lawns/gardens being connected to one owner's meter.
In these circumstances, the owners may decide to install a new common connection, which is the best long term outcome - but the associated costs must be met by all owners and it's expensive, particularly if it's only a small scheme. A new water meter, for example, is approximately $4,000.00.
More commonly, we see the Strata Company arranging for a sub-meter to be installed, which is attached to one lot. This enables for accurate calculation of common consumption, but the owner of the lot will still require reimbursement.
Water sub-meters worked example
- A sub-meter is installed for reticulation use. In the example below, the sub-meter is installed on the water line belonging to Lot 4
- When the reticulation is being used, it will still read on the main unit's water meter but also pass through the sub-meter.
- Lot 4 will then minus any use through the sub-meter from their main meter reading when they get a bill. This will then be calculated as per the agreement (usually set out in a by-law)
If the owners want a completely separate account for the common water and tap, then a new supply main supply and water meter would be required. The diagram below would show 5 x mains, with one being a common supply.
Only 1 meter servicing all lots
Similarly, you may have a scenario where 1 water meter is installed at the scheme and the total water consumption (of all lots and common supply) is paid via the Strata Company. Some owners may feel that this is unfair, particularly where one lot may have 6 occupants and the neighbour has 1 occupant but both have the same unit entitlement (UE). Effectively, the sole owner-occupier will be subsidising their neighbour.
Investors may not be able to on-charge water use that is captured in levies as it is impossible to accurately determine actual consumption. Some lease agreements may only enable a landlord to on-charge based on actual consumption.
The strata company may install sub-meters to the site so that the water use of the individual lots can be accurately on-charged.
Depending on the set-up of the metering infrastructure these can either be:
- Water Corporation submeters - meters are read by Water Corporation and billed directly to the account holder
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Private sub-meters - meters and read and billed by the Strata Company or other employees i.e. Strata Managers or private meter reading companies. The process involves a reading being taken in line with the issuance of the Water Corporation invoice by taking a photo of the meters and sending it to us. We then calculate consumption and issue a ‘water levy’ (based on unit cost x units consumed)
Installing sub-meters in a scheme can be an advantage to both owner-occupiers and investors because: - As an owner-occupier, you are assured that you are only being billed for the water usage that you are actually using
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As an owner investor, the water usage component of your rates notice can be on-charged to the tenant*
*Subject to the lease agreement wording
Without sub-meters, water consumption will form part of the Strata Company expenses i.e. budget expense item and be charged in accordance to unit entitlement.
There are some links below for further information.
Shared Water Meter Charges
Sub-meter options for multi-residential developements