House Turned Into A Duplex - One Meter - How To Charge Utilities?

[William Davidson]

Hi BP,

I wanted to hear your take when it comes to charging tenants for utilities. The property is a single family home which I have turned into a duplex by splitting up the top floor and bottom floor by using a lock out. The house only has one meter, so it is hard to decipher the total amount of utilities per unit. 

Details on the property: Downstairs unit is 700 square feet (2b1b) and Upstairs unit is 1400 square feet (2b2b). 

I was currently thinking about not charging downstairs for utilities and having them baked into the price of rent. I was thinking of charging upstairs for the utilities, but have a percentage (formula driven) which I would take off of the total utilities for the month. My thought process is to make sure tenants are still held responsible for turning utilities off and on, while still having only one meter.

I was thinking of having a percentage formula based off of - total square feet, max occupancy per unit, and rent price. After averaging all these out I came up with a 40% credit off of all utilities for the top unit.

What are your thoughts? Anything is greatly appreciated.

[Ellis San Jose]

This is ripe for conflict. Unless you can run a sub-meter to isolate usage, plan on paying for it & including it in the rent.