FAQs: Water charges in tenancies

Water charges in tenancies are subject to a number of rules. Full water usage (including the bulk water charge) can be passed onto the tenant if all of the below conditions are met:

• The property is individually metered,
• The property is water efficient (the water efficiency requirements are contained in the Residential Tenancies and Rooming Accommodation Regulation Section 22), and
• The tenancy agreement states the tenant must pay for the water consumption - meaning Item 12.2 is ticked 'yes'.

Q: Is it law that the owner must provide a certificate from a plumber stating the premises is water efficient?

A: No, it's not law. However, having this evidence is best practice to help minimise disputes. If the tenant disputes paying for water usage on the basis the property doesn't meet the water efficiency requirements, the onus is on the lessor to provide evidence that it does.

This evidence could include receipts for the plumbing fixtures installed in the property, although a plumber's certificate stating the property meets the water efficiency requirements is the most ideal piece of evidence if the dispute escalates to QCAT. Our recommendation is to provide a copy of the compliance certificate with the Form 1a Entry Condition Report.

Q: Should the owner have a new compliance certificate completed for each new tenancy?

A: As mentioned above, a plumber's certificate is not law but a best practice recommendation to help minimise disputes. Best practice would be to have a plumber's certificate for a new tenancy if you have taken over the management and don't have a full history of the maintenance performed or the entry and exit condition reports.

The relevant plumbing fixtures may have changed from when the plumber's certificate was originally issued. If the tenant challenged the validity of the plumber's certificate, you wouldn't have the evidence to support there had been no changes to the premises from when it was issued.

Conversely, if you've been managing the property and there have been changes to the relevant plumbing fixtures from when the water compliance certificate was issued, then it would be advisable for the owner to obtain a current certificate for the commencement of the tenancy.

Best practice tip: Negotiate with the plumbers who work on your rent roll to include a regular compliance check when they're attending to other plumbing work at a property. Ask them to incorporate a statement on the tax invoice stating that the property still meets the water efficiency requirements.

Q: Do you need to pass on the utility bill from the utility provider to the tenant or can you issue your own invoice?

A: From 30 September 2024, if a tenant is responsible to pay for water consumption charges under their tenancy agreement, then the lessor must provide to the tenant the ‘documents’ issued by a service provider (utility provider or local council) within weeks after the lessor receives the document. The documents must show the amount payable to the utility provider.

The tenant is not required to pay an amount for water consumption charges if the tenant has not received the relevant document within the required timeframe.

Note: A document is taken to be received by the lessor when the lessor physically receives the document. Property managers or lessors can provide evidence to show when the lessor received the document. This may be difficult if the document is received via post.

This means that if a property manager issues their own invoice to the tenant for water consumption charges, unless they provide the bill issued by the utility provider or council within four weeks of receipt by the lessor, then the tenant does not need to pay for the water consumption charges.  

Property managers should review their water billing practices and adjust processes to comply with the new requirements under sections 166 and 166A of the RTRA Act. 

Q: Should property managers ask their clients to redirect all utility bills to them directly? 

A: Many property managers have their clients redirect their utility bills to the agency to ensure they are dealt with within the required four-week timeframe; however, some clients may not agree to this.

The REIQ recommends that property managers explain the new requirements to their client and the importance of the lessor passing on the utility bills to the property managers so that they can ensure they pass them onto the tenant within the required period. Realworks users can use the REIQ Client Instruction Form – Utility and Services Information form to assist with obtaining relevant instructions in writing. 

Note:  If a property manager is passing on a utility bill or rates notice to a tenant in compliance with these requirements, the personal information of the lessor should be removed or redacted from the document before it is provided to the tenant.

Q: Is a tenant required to pay for water consumption charges for a period that is only part of a utility provider’s billing period? 

A: A tenant may be required to pay an amount for water consumption charges for partial billing periods if:

• a meter reading for the premises was taken at the following times and recorded in a condition report: 

o if the partial billing period starts at the start of the tenancy—when the tenancy commences;  

o if the partial billing period ends at the end of a tenancy—when the tenant hands over vacant possession of the premises; and  

• the amount is calculated based on:  

o a reasonable estimate of the volume of water supplied to the premises during the partial billing period having regard to the meter reading; and  

o the rate used to calculate the water consumption charge stated in the most recent water consumption charges document.  

This means that a property manager or lessor will be able to provide an invoice for water using calculations based on the water meter reading, if the tenancy starts or ends during a utility provider’s billing period provided that a water meter reading is recorded in the entry and exit condition report and the water usage is calculated in accordance with the above requirements.

Q: If a property has a separate water meter but it doesn't meet the water efficiency requirements, can the owner still charge for water usage?

A: The owner can charge for 'excessive' water usage, although not all water usage as they must provide a 'reasonable' amount of water. You would still tick the yes box for Item 12.2 of the Form 18a General Tenancy Agreement. However, you would include a special term which states how many kilolitres (kLs) of water are provided for usage by the owner and what thereafter becomes the responsibility of the tenant/s to pay water usage charges over this amount.

Q: What is a reasonable amount of water?

A: There is not a statutory requirement, although Section 169 of the RTRA Act states what the tribunal must consider if there is a dispute. A good starting point is to find out what the average water usage is for the area in which the property is located from the water provider. You will then need to take into account the other aspects stated and ensure the PO Form 6 signed by the owner nominates the kLs provided by the owner.

(4) In deciding an amount payable by a tenant for outgoings for a water service charge, the tribunal must have regard to the following - 

(a)relevant available information about water usage and charges for premises in the local government area in which the relevant premises are situated;

(b)the area of the relevant land;

(c)any terms of the agreement affecting the amount of water used;

(d)the presence or absence of water saving devices in the premises;

(e)the number of persons occupying the premises;

(f)the quantity of water for which the Lessor should reasonably be liable;

(g)anything else the tribunal considers relevant.

Best practice tip - avoiding water usage disputes starts with setting up the PO Form 6 correctly, managing expectations and educating the owner.

1. If the property has a separate meter and it meets the water efficiency requirements, make it a requirement when engaging your management services for the owner to pay to have a plumber's certificate so the tenant can be provided with evidence with the Form 1A Entry Condition Report.
2. If the property has a separate water meter but doesn't meet the water efficiency requirements, ensure you tick the second box of the Realworks PM Schedule, Item H and include the agreed kLs the owner will pay for. The Form 18a General Tenancy Agreement will then need to include the relevant special term as per these instructions.

Have more questions on this topic or others? REIQ Members can access the Property Management Support Service by calling 1300 697 347 or emailing ask@reiq.com.au. Not a member? Join today!

Read another property management article: Can the rent be increased after a tenant breaks the lease?

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