Utilities Were Included in Rent — Can You Make the Tenant Start Paying Hydro?

When your tenant first moved in, you agreed on: $2,300/month—utilities included.

At the time, hydro, gas and water were manageable.

A few years later, utility bills have gone up significantly. Maybe the tenant is using much more electricity, running the heat higher, or your monthly bills are simply becoming too expensive.

So you start thinking:

“Can I just ask the tenant to start paying hydro?”

For Ontario landlords, the answer is generally not as simple as changing the lease or sending the tenant the next hydro bill.

If utilities were included as part of the existing tenancy, there are rules around changing that arrangement.

Here’s what landlords need to know.

What Does “Utilities Included” Actually Mean?

When a landlord and tenant enter into a tenancy, they can decide who will be responsible for utilities such as:

• Electricity
• Water
• Heat

For example:

Option A: $2,300/month, utilities included.

Option B: $2,100/month, tenant pays their own utilities.

Both arrangements can exist.

The important part is what was agreed upon for your particular tenancy.

The Ontario Landlord and Tenant Board explains that when utilities are included in the rent, the landlord is responsible for paying those utility bills, and the rent does not simply change because utility costs increase or decrease.

Can the Landlord Suddenly Change the Arrangement?

Imagine the tenant has lived there for three years.

Their lease says:

Rent: $2,300
Hydro: Included

The landlord receives a $400 hydro bill and sends the tenant a message:

“Starting September 1, hydro is no longer included. Please transfer the account into your name.”

That’s where problems can begin.

The fact that hydro has become more expensive does not automatically give the landlord the right to remove an existing utility arrangement.

For certain changes involving electricity or utility-cost sharing, Ontario law requires specific procedures that can include written tenant consent, proper notice and a corresponding rent reduction.

So landlords shouldn’t simply assume:

“I own the property, so I can change who pays the utilities.”

What If the Tenant Agrees?

This is different.

Suppose both sides decide that having the tenant pay their own electricity makes more sense.

That doesn’t necessarily mean you can simply shake hands and start tomorrow.

Ontario has specific requirements around transferring responsibility for electricity in applicable situations. For example, where a qualifying meter or suite meter is involved, terminating the landlord’s obligation to supply electricity can require the tenant’s written consent, proper notice and a rent reduction that accounts for the electricity costs.

For utility-cost apportionment in buildings with no more than six rental units, the Residential Tenancies Act similarly requires written consent, notice and a prescribed rent reduction.

So even when everyone agrees, structure the change properly.

Why Would the Rent Need to Go Down?

This is the part that surprises some landlords.

Imagine the tenant currently pays:

$2,300 including utilities.

The landlord says:

“From now on, you pay your own hydro.”

If the tenant continues paying the exact same $2,300 plus hydro, the landlord has effectively removed something that was previously included in the arrangement without accounting for its value.

That’s why Ontario’s utility-transfer rules can require an appropriate rent reduction when responsibility is transferred.

The calculation shouldn’t simply be:

“Hydro usually costs around $150, so I’ll reduce your rent by $150.”

There are prescribed rules that may apply depending on how the utility arrangement is being changed.

What If the Tenant Says No?

This is where many landlords become frustrated.

The landlord may think:

“My utility bill doubled. Why should I keep paying it?”

But if the existing tenancy includes utilities, rising costs alone don’t automatically rewrite the agreement.

If the proposed change requires the tenant’s consent and the tenant refuses, the landlord shouldn’t simply transfer the account anyway or start adding utility charges to the tenant’s monthly payment.

The LTB provides a specific tenant application process where a landlord transfers utility costs without obtaining required written consent, giving the required notice or making the proper rent reduction.

What If the Tenant Is Using an Unreasonable Amount of Electricity?

This is another common situation.

Maybe your tenant:

• Runs portable heaters constantly
• Charges an electric vehicle
• Keeps the air conditioning running heavily
• Adds additional appliances
• Uses dramatically more electricity than previous tenants

The landlord sees the bill and thinks:

“This can’t possibly still be included.”

But high consumption does not automatically change the existing utility arrangement.

Instead of making an immediate unilateral change, document what’s happening and determine whether there is another issue that needs to be addressed under the tenancy.

For future tenancies, this is exactly why landlords should think carefully about whether an all-inclusive arrangement makes sense.

What About a House With Multiple Rental Units?

This can become more complicated.

Imagine a house has three rental units but only one water or gas meter.

The landlord can’t necessarily look at a $600 bill and casually decide:

“Everyone owes $200.”

Ontario has specific rules for landlords of buildings containing no more than six rental units who want tenants to pay apportioned utility costs. These rules address matters such as tenant consent, notice, calculation methods and rent reductions.

If your property has several rental units sharing utilities, make sure you understand the applicable rules before changing how those costs are divided.

All-Inclusive Rent vs. Tenant-Paid Utilities: Which Is Better?

There isn’t one answer for every rental property.

All-inclusive rent can be simpler.

The tenant pays one predictable amount every month.

This may work well when utilities are relatively stable or when separating the utility accounts isn’t practical.

But the landlord takes on the risk of increasing utility costs.

Tenant-paid utilities can give the landlord more predictable expenses.

It may also give tenants more incentive to manage their own consumption.

But the arrangement needs to be established properly.

For a new tenancy, landlords should decide how utilities will be handled before the tenant signs the lease.

That’s much easier than trying to restructure an existing tenancy several years later.

A Simple Example

Imagine you’re preparing a GTA property for a new tenant.

You estimate utilities will average approximately $250 per month.

You might consider:

Option A

Rent: $2,500
Utilities: Included

Or:

Option B

Rent: $2,250
Utilities: Tenant’s responsibility

These are only illustrative numbers, but they demonstrate the point:

Don’t just compare the rent.

Think about the total cost and risk of operating the property.

Common Mistakes Landlords Should Avoid

The biggest mistake is waiting until the utility bill becomes expensive before thinking about the arrangement.

Avoid assuming you can simply:

• ❌ Add $200 to the tenant’s monthly payment
• ❌ Send them the hydro bill because consumption increased
• ❌ Tell them utilities are no longer included starting next month
• ❌ Transfer responsibility without checking the applicable requirements
• ❌ Divide a shared utility bill however you think is fair

Ontario has specific rules around utility arrangements, particularly when an existing landlord-paid utility is being transferred to tenants.

What Should Landlords Do Instead?

If utilities are already included and you want to change the arrangement, start by reviewing:

1. The existing lease
What exactly does it say about electricity, water and heat?

2. The property’s metering setup
Does the unit have its own meter, or are utilities shared?

3. The reason for the change
Are costs simply increasing, or is there an unusual consumption problem?

4. The legal requirements for the proposed change
Does it require written consent, notice or a rent reduction?

5. Your plan for the next tenancy
Even if changing the current arrangement isn’t practical, you may be able to structure the next tenancy differently where legally permitted.

If you’re unsure, get proper guidance before changing the tenant’s charges.

Final Thoughts

If your tenant has been paying $2,300 with utilities included for years, you generally shouldn’t suddenly tell them:

“Starting next month, the rent is still $2,300—but now you pay hydro too.”

Ontario’s rules recognize the utility arrangement established in the tenancy, and certain changes require specific procedures, including written consent, notice and rent reductions where applicable.

For landlords, the best time to think about utilities is before the lease is signed.

Should utilities be included?

Should the tenant pay them directly?

Are the units separately metered?

How much could utility costs realistically increase?

These small decisions can make a major difference to the long-term cost of managing a rental property.

At Topromanage, good property management isn’t just about collecting rent. It’s about setting up the tenancy correctly, controlling operating costs, maintaining proper documentation and dealing with problems before they become expensive disputes.

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