Utilities in Ontario Rentals: Who Pays What?

One of the first questions prospective tenants ask is: "What's included?" Your answer directly affects how you price the unit and who applies. Getting utility arrangements right — and documenting them properly — is one of the most practical things you can do as an Ontario landlord.

The Three Basic Arrangements

Most Ontario rentals fall into one of three utility structures:

1. Tenant pays all utilities The tenant sets up their own accounts for electricity, gas, and sometimes water, and pays those bills directly. Your rent is lower to reflect their added costs.

2. Landlord pays all utilities You include everything in the monthly rent. Simpler for the tenant, but you absorb fluctuating costs — especially if tenants are careless with heat or electricity.

3. Split arrangement A common hybrid: the landlord includes water (which is often billed to the property owner by the municipality anyway), and the tenant pays hydro and gas separately.

There's no single "right" approach. It depends on your property type, how it's metered, and what the local market expects.

Electricity (Hydro)

In Ontario, electricity is distributed by local utilities — London Hydro, Hydro One, Erie Thames Powerlines, and others depending on your area. If your unit has its own hydro meter, the tenant can set up their own account and pay directly.

If the unit does not have a separate meter — common in older duplexes, basement apartments, and multi-unit buildings — electricity is likely billed to the property owner. In that case, you have two options:

• Include hydro in rent — simple, but you're exposed to high usage
• Install sub-metering — a licensed sub-metering company installs individual meters per unit; tenants then pay the sub-metering company directly

Ontario's Residential Tenancies Act allows sub-metering in new tenancies, but there are rules around how it's set up and disclosed. If you switch an existing tenant from included hydro to sub-metered, you must reduce the rent by the amount previously attributable to electricity — and the process has specific requirements. Don't try to do this without proper documentation.

Heat

Heating fuel varies across Southwestern Ontario. Many London homes use natural gas (Enbridge), while some older properties in St. Thomas and Sarnia use oil or electric baseboard heaters.

Important: Ontario law requires landlords to maintain a minimum indoor temperature of 20°C from September 1 to June 15. This is not optional — it applies regardless of who pays the heating bill. If you've structured the lease so the tenant pays gas and they can't afford to heat the unit, you're still on the hook if the temperature falls below the legal minimum.

For this reason, many landlords in smaller markets like Sarnia and St. Thomas include heat in the rent, particularly in older buildings where heating costs are hard to predict and usage varies significantly between tenants.

Water and Sewer

Water and sewer in Ontario are almost always billed by the municipality to the property owner — there's typically no mechanism to put the account in a tenant's name. This means water is a cost most landlords absorb and factor into their rent.

That said, tenants can still significantly affect your water bill through excessive use, running toilets, or leaking fixtures. Installing low-flow fixtures and doing annual inspections can reduce water costs noticeably.

Internet and Cable

You are not legally required to provide internet or cable to your tenants. Most tenants set up their own internet service directly with a provider.

If you do offer internet as an included amenity (common in furnished units or rent-by-the-room setups), make sure the lease clearly states what is included and that you reserve the right to change providers if needed.

How to Document Utilities in Your Lease

Ontario's standard lease form (Form No. 2229E) includes a section specifically for utilities — which are included, which the tenant pays, and the details of any sub-metering or separate billing arrangements. Fill this out clearly and completely. Our guide to writing a lease agreement in Ontario covers how to document these arrangements clearly.

Ambiguity in the lease about utilities is a common source of disputes. "Heat included" should specify what type of heat. "Tenant pays hydro" should include account setup instructions.

Keep a copy of any utility account numbers, provider contact details, and transfer records in your property file.

Pricing Your Rent Based on What's Included

If you're trying to figure out whether to bundle utilities or not, run the numbers both ways. In London, for example, a unit renting at $1,500 with everything included might rent at $1,200–1,300 all-utilities-out, depending on the expected hydro and gas costs.

When utilities are included, tenants are often willing to pay a premium — and vacancy periods can be shorter because the all-in price is easy to budget. The tradeoff is exposure to usage variability and utility rate increases.

A property manager like Prospera Properties can help you model utility costs based on the property type and help you set a rent that protects your margins while staying competitive in the local market.

What Happens If the Tenant Stops Paying Utilities They're Responsible For

When a tenant pays utilities directly and falls behind, the utility company will eventually disconnect service. That creates a problem for you.

For heat: even if the lease assigns heat costs to the tenant, Ontario law requires landlords to maintain a minimum indoor temperature of 20°C from September 1 to June 15. If the tenant's gas gets cut off and the unit drops below 20°C, you are still in breach of the RTA — regardless of who pays the bill.

Your options when a tenant is behind on utilities they pay:

1. Serve an N5 if the situation constitutes interference with reasonable enjoyment of the building (for instance, if other tenants are affected by loss of shared utilities)
2. Step in and pay the utility to restore service, then pursue repayment — document everything in writing
3. Negotiate — many utility companies will work with landlords when a tenant is in arrears and the landlord demonstrates awareness of the situation
4. Consider the structure for future tenancies — landlords who have been burned by non-payment of heat often switch to including heat in the rent for the next tenant

The vital services cutoff rules in the RTA apply in reverse too: if you stop paying utilities that you've agreed to cover, the tenant has a T2 application right against you. See vital services cutoff rules for Ontario landlords for the full picture.

Utility Structures by Property Type: What Actually Works in London

The right utility structure depends heavily on the property.

Basement apartments and secondary suites: Heat and hydro are almost always shared systems in older London homes. Sub-metering adds cost and complexity. Most basement apartment landlords include all utilities and price accordingly.

Single-family detached rentals: In London's R1 and R2 zones, tenant pays heat and hydro directly is the norm for full-house rentals. London Hydro (central London) and Hydro One (east/south edges) each have their own account transfer processes — confirm which provider covers the address before the lease is signed.

Duplexes and triplexes: Separate meters per unit are the ideal. If there's a single meter, you're paying hydro and building the cost into rent. Combining utility costs into rent on a multi-unit building adds predictability for tenants but exposes you to high-usage variability between units.

Student rentals (near Western, Fanshawe, Brescia): All-inclusive is the market norm. Tenants in the student market compare all-in prices and often won't consider utilities-out listings. Price accordingly and budget for above-average utility consumption.

A Few Practical Tips

• Read the meter at move-in and move-out — document readings with photos and include them in your move-in/move-out inspection report
• Know who to call for emergencies — keep the contact number for the local gas company and hydro provider in your records; tenants may not know who to call if there's an outage or gas smell
• Inform tenants about utility providers upfront — if they need to set up their own accounts, give them the provider name and a timeline; delays in account setup can create billing confusion
• Confirm the utility accounts are transferred on the tenant's move-in date — a gap in the account transfer means the bill reverts to you for that period; track it

Frequently Asked Questions

Who is responsible for heat in an Ontario rental — landlord or tenant?

Regardless of who pays the utility bills, Ontario law requires landlords to maintain a minimum indoor temperature of 20°C from September 1 to June 15. Even if the lease says the tenant pays gas, you're still legally responsible if the unit falls below that temperature. This is why many landlords in smaller markets like Sarnia and St. Thomas include heat in the rent, especially in older buildings with unpredictable heating costs.

Can a landlord switch from utilities-included to tenant-pays-utilities mid-tenancy?

Not without proper process. If you want to convert an existing tenant from included hydro to sub-metered electricity, the RTA has specific requirements — including a reduction in rent by the amount previously attributable to electricity. Attempting to shift utility costs to a tenant without following this process can expose you to LTB applications and orders to repay any amounts improperly charged.

How should utility responsibilities be documented in an Ontario lease?

Ontario's Standard Lease form includes a dedicated section for utilities — specifying which are included in rent and which the tenant pays. Fill this out clearly and completely. Ambiguity about who pays heat, hydro, or water is one of the most common sources of landlord-tenant disputes. "Tenant pays hydro" should also include account setup instructions and the name of the local utility provider.

Can a landlord in London or Sarnia put water bills in a tenant's name?

In most Ontario municipalities, water and sewer charges are billed by the municipality to the property owner — there is typically no mechanism to transfer the account to a tenant. Water is therefore almost always a landlord expense, factored into the rent. Tenants can significantly affect your water bill, so low-flow fixtures and annual plumbing inspections are practical cost-management tools.

What is sub-metering and can a landlord require it in Ontario?

Sub-metering is a system where a licensed company installs individual electricity meters per unit, allowing tenants to pay for their own consumption directly. Ontario law permits sub-metering for new tenancies, but switching an existing tenant from included hydro to sub-metered requires a rent reduction equal to the amount previously attributable to electricity, following a specific regulatory process. Don't implement sub-metering without proper documentation and tenant notification.

Getting your utility structure right at the start of a tenancy saves a lot of confusion — and potential disputes — down the road. For your broader obligations under Ontario law, see our guide to landlord maintenance responsibilities in Ontario.

If figuring out utility structures, pricing, and tenant agreements across multiple properties is taking more time than it should, see what property management costs in London — a manager who handles this daily brings a pricing and structuring perspective that most individual landlords build slowly through trial and error.