Executive Summary
25-unit Ontario rental building saw water costs surge from $9.4k in 2022 to $25k in 2024 despite no changes in tenant profile or major infrastructure.
Traditional leak-finding efforts failed. The owner installed hot- and cold-water submeters in every unit and converted key plumbing runs from daisy-chain (series) to parallel where required.
Results (late-2024 to mid-2025):
70%
$7,100
2025 projected utility cost
versus $25,000 in 2024.
$5,015/year
$3,710
$11,990
$240k
at a 5% cap rate
(rule of thumb: $1 NOI = $20 value).
Beyond the economics, submetering delivered fairness, faster leak detection, better tenant relations, and clearer accountability.
Property at a Glance
| Attribute | Details |
| Type | 25 one-bedroom apartments |
| Construction | Two-storey brick, concrete & steel (built 1967) |
| Heat & DHW | Electric heat; domestic hot water (DHW) via 2 commercial gas heaters |
| Plumbing | Originally series (“daisy-chain”) distribution in many runs; unit shut-offs present |
| Location | Ontario, Canada |
Tip: If unit shut-off valves are missing, add them during meter install to minimize future disruption.
Context: Before Installation
- Water was included in rent; tenants had little incentive to conserve or report leaks.
- Tenant letters produced no leak reports, though four leak sources were later confirmed.
- Utility costs rose sharply: $9.4k in 2022 to $17.3k in 2023 to $25.0k in2024.
- Nothing material changed in tenant mix or building systems. A hidden underground leak was suspected; an investigation found no such leak.
- Impact on value: rising water operating expense dramatically reduced net operating income (NOI) and baseline property value
Pre-Meter Investigative Efforts (Unsuccessful)
- Tenant campaign to report leaks – no responses.
- CCTV review for outdoor misuse such as car and pet washes – none found.
- Unit-by-unit inspections for visible leaks and unauthorized appliances – none found.
- Installed additional shut-offs; plumber corrected minor issues.
- Specialist helium/sound leak detection on buried lines – no underground leaks found.
- Utility company replaced house meter – consumption remained elevated before and after.
Monthly Water Cost Before Installation
| Date | Amount |
| 2023 04 18 | $858.72 |
| 2023 05 17 | $1,049.42 |
| 2023 06 15 | $1,104.02 |
| 2023 07 20 | $1,196.38 |
| 2023 08 16 | $2,594.43 |
| 2023 09 18 | $1,544.06 |
| 2023 10 17 | $1,973.72 |
| 2023 11 16 | $2,294.84 |
| 2023 12 18 | $2,214.56 |
| 2024 01 22 | $5,122.64 |
| 2024 02 20 | $2,259.26 |
| 2024 03 15 | $2,539.48 |
| 2024 04 16 | $2,837.18 |
| 2024 05 15 | $2,232.62 |
| 2024 06 13 | $2,397.50 |
| 2024 07 22 | $2,150.18 |
| 2024 08 19 | $2,910.46 |
| 2024 09 18 | $2,191.40 |
Average Daily M3 Consumption
| Date | Value |
| 2025 06 12 | 3.67 |
| 2025 05 13 | 4.22 |
| 2025 04 11 | 4.31 |
| 2025 03 13 | 4.11 |
| 2025 02 13 | 3.50 |
| 2025 01 14 | 4.18 |
| 2024 12 11 | 4.89 |
| 2024 11 13 | 5.52 |
| 2024 10 11 | 8.43 |
| 2024 09 13 | 16.41 |
| 2024 08 15 | 18.62 |
| 2024 07 12 | 16.10 |
| 2024 06 13 | 15.26 |
| 2024 05 10 | 17.32 |
| 2024 04 12 | 19.90 |
| 2024 03 12 | 19.71 |
| 2024 02 13 | 16.79 |
| 2024 01 15 | 19.39 |
| 2022 11 14 | 5.39 |
| 2022 10 14 | 5.47 |
| 2022 09 14 | 5.53 |
| 2022 08 15 | 6.48 |
Constraints & Strategy
1. Building Plumbing: Series (Daisy-Chain) vs. Parallel
- In many pre-1980 Ontario rentals, fixtures are fed in series along the same run. If meters are placed in series, the first unit’s meter registers the flow for all downstream units.
- Solution: re-pipe critical segments to parallel so each suite’s meter measures only that unit. Requires professional design, safe work on pressurized lines, isolation valves, pressure balancing, and backflow control.
2. Ontario Residential Tenancies Act (RTA) Requirements (Rent Control & Utilities)
- If water was included in rent, a tenant generally cannot be compelled to start paying variable water charges unless individually metered and the tenant consents in writing.
- Flat, pre-disclosed utility charges are permitted but bill-splitting by formula (e.g., % or occupants) is generally unenforceable absent metering and consent.
- Vacancy de-control: upon turnover, a new lease can require the tenant to pay metered utilities.
- Rental agreement planning: include an additional term/condition as permitted in Section 15 “Additional Terms” of the Ontario standard tenancy agreement that has the tenant authorize future submetering and rent adjustments using a clearly defined, fair rent-reduction method and calculation. I added 78 additional terms to the standard agreement and called it Appendix B.
Solution Overview
- Vendor: Alliance Metering Solutions (AMS).
- Scope: 52 meters (hot + cold for each of 25 suites; two lines per suite.
- Network: Remote read & leak-analytics enable rapid anomaly detection.
- Change management: Owner coordinated scheduling, entry, pets/privacy concerns, and post-install repairs to cabinets/walls to maintain goodwill.
Why Submetering Helps
(even if water cost remains inclusive in tenant rent)
Typical Canadian Household Indoor Water Use Breakdown
Toilets
35%
Showers & Baths
45%
Drinking & Cooking
10%
Dishwashing by Hand
5%
Waste (letting water cool or heat up)
5%
Toilet flushing accounts for more than a third of the average rental unit’s water consumption. Therefore, a “running” toilet (water does not shut off when the toilet’s reservoir is full), can be financially catastrophic.
“Running” Toilet Water Consumption (litres per hour)
Small or Slow Leak
30 to 60
Moderate Leak
120 to 240
Large Leak
300 to 900
Whether tenants paid for their water, installing water meters brought some instant benefits.
- Fairness & transparency: tenants see and (where applicable) pay for their own usage; fewer disputes.
- Leak analytics: continuous low-flow patterns flag running toilets and drips quickly.
- Targeted dispatch: maintenance can address a specific unit instead of inspecting the whole building.
- Cost control: reduced operating expense, improved NOI, higher asset value.
- Environmental, Social, and Governance (ESG): lower water and energy for domestic hot water; less strain on municipal systems.
Tenant Communication & Change Management
Transparency and early, detailed communication to tenants that answers all the anticipated questions and concerns is a critical success factor in building tenant understanding of, and reduced resistance to, the change.
Tenants were informed well in advance via a clear, respectful letter (see Exhibit A) explaining:
- The rationale for metering—fairness, conservation, accountability
- The process and estimated timeline for each unit’s installation
- Tenant preparations
- Tenant obligations
- Calculating the rent reduction
- Completing repairs to wall and cabinet damage done for the installation
Rent reduction methodology (summary):
Normalize 2023–2024 bills to remove abnormal leak-driven consumption.
Average normalized per-unit monthly cost across multiple years = $45.55/unit/month rent reduction where tenants begin paying their own metered water.
Issue revised N1s where required and implement on the next rent cycle. (See Exhibit B for a personalized example.)
Implementation Notes
- Meters: 52 (hot + cold per unit).
- Installer: AMS (supply + install). Owner coordinated entry scheduling and follow-up wall and cabinet repairs.
- Scheduling: 4 days, average 6 units/day with overlap to accommodate access or faster progress.
- Post-work: patch/paint and cabinet repairs scheduled promptly.
Operations After Go-Live
- Billing cadence: prior month’s usage billed ~15th; 25-day payment window.
- Service charge: flat admin charge per account (billed even if 0 m³).
- Deposits: AMS waived setup/security for existing tenants.
- Owner portal: monthly reports with consumption and collections; deposits made directly to owner’s account.
Results & Financial Impact
Observed bills (Aug 2024 to Jul 2025): rapid decrease after December install.
| Month | 2024 08 | 2024 09 | 2024 10 | 2024 11 | 2024 12 | 2025 01 | 2025 02 | 2025 03 | 2025 04 | 2025 05 | 2025 06 | 2025 07 |
| Amount | $2,150.18 | $2,910.46 | $2,191.40 | $2,092.20 | $844.88 | $638.78 | $667.23 | $505.87 | $552.97 | $600.07 | $647.17 | $529.42 |
2025 projection
(Jan–Jul actuals annualized):
about
$7,100
Tenant recovery (first 5 months) $2,088.96 collected and about
$5,015
/year projected
Admin fees for
8 legacy inclusive tenants:
$16.89/tenant × 12 months × 8 tenants
$1,621.44
Owner Net Utility Economics (projected):
Utility cost (billings)
$7,100
annualized from most recent 7 months in table above
Minus, tenant paid water recovery cost
$5,015
annualized from first five AMS remittances
Net water cost
$2,085
($7,100 – $5,015)
+$1,621
$16.89/tenant × 12 months × 8 tenants$3,710
$2,085 net water cost + $1,621 admin fees$11,990 Annual NOI Boost Drives $239,800 Property Value Increase
NOI impact: $25,000 − $3,710
$21,290
operating expense reduction
Required rent reductions:
17 tenants × $45.55/month × 12 months
$9,299
NOI decrease
$11,990
increased cash flow$239,800
Intangibles:
Faster Leak Isolation
Fair Allocation
Fewer Disputes
Conservation Incentives
Reputational Lift
Improved Buyer/Lender Confidence
Lessons Learned
- Plan legal and rental agreement mechanics early. Insert future-submeter clauses now; use vacancy de-control to transition.
- Normalize before setting rent reductions. Strip out leak-driven spikes to avoid over-reducing rent.
- Communicate like crazy. Assume the lowest common denominator and over-explain the why, how, timeline, and math.
- Pair meters with maintenance. Fix valves, flappers, shower cartridges at same time.
- Use the data. Low-flow plateaus in data and charts scream “running toilet.” Act immediately. Hundreds of dollars an hour could be going down the toilet
- Track collections and fees. Net utility operating costs matter, not just gross savings.
Closing Thought
Submetering is as much people/process as it is pipes/meters. With proactive rental agreement language, disciplined normalization for rent reductions, and empathetic tenant communication, a mid-century, daisy-chained building achieved a rapid, sustainable reversal from rising costs to measurable NOI gains and material asset uplift—with fewer headaches in the future.Appendix A
Generic Tenant Letter
(Suite Metering, Pay Own Bill, Rent Reduction)
[The following sample letter was not personalized. It was sent to every tenant that would start paying their own water bill and consequently receive a $44.55 in their rent. Remember that the tenant must have signed a residential tenancy agreement that included the “conversion” clause.]
[Date]
WATER METER INSTALLATION, PAY OWN BILL, RENT REDUCTION
Dear [building address] Tenant,
You agreed in your Tenancy Agreement that once water suite metering was installed, you would assume payment of your own water bill (see Appendix B, clause 11).
Issue
The principal reason for us undertaking this significant capital expense was that the property’s monthly water bill had increased by 154% over two years. It took a very long time and notable expense to us to determine the sources of this huge increase.
[Utility company name] Water Annual Rate Increases
During the same time period, [city name] water rates increased a total of 12.3% for water consumption and 12.4% for sewer.
| Year | Water | % Incr. | Sewer | % Incr. |
|---|---|---|---|---|
| 2020 | $2.07 | – | $1.90 | – |
| 2021 | $2.12 | 2.4% | $1.94 | 2.1% |
| 2022 | $2.27 | 7.1% | $2.08 | 7.2% |
| 2023 | $2.33 | 2.6% | $2.13 | 2.4% |
| 2024 | $2.39 | 2.6% | $2.19 | 2.8% |
[Insert weblink to water utility rates]
Causes of Water Wastage
It turns out that several tenants had “running toilets,” and a couple of others had dripping faucets and shower heads – none of which were ever reported to us. We also found a hidden minor leak in one of the two commercial hot water tanks, which tank we replaced a couple of months ago, and a hidden minor leak from an unseen hairline crack in one of the laundry machine water faucets, which has since been replaced.
Running toilets (toilets that never shut off) cause massive water loses. A tenant in another building who has a water meter but still didn’t report their running toilet, consumed more water in one month than the entire building for the same time period. Their water bill was over $1,400 for that one month.
Water Suite Metering
Consequently, we made the decision to engage Alliance Metering Solutions (AMS) to install cold and hot water meters in every rental unit: https://alliancemetering.com/
In addition to reflecting fairly each tenant’s water consumption and sewage needs, the technology also has the capability to identify significant water leaks, and can near-instantly remotely alert property staff of the issue.
Calculation of Rent Decrease to Offset Suite Metering
Your rent will be reduced accordingly for the water you have been previously using. To calculate a fair rent reduction, we needed to “normalize” the water bills to remove the significant water losses, since these losses were not reflective of typical tenant water consumption. Here’s the process we went through to determine a fair rent reduction for water consumption
Billing Actuals
| Year | Annual Bill | # Tenants | $/Tenant Annual | $/Tenant Monthly |
|---|---|---|---|---|
| 2022 | $10,125.80 | 25 | $405.03 | $33.75 |
| 2023 | $17,252.98 | 25 | $690.12 | $57.51 |
| 2024 | $25,702.76 | 25 | $1,028.11 | $85.68 |
Adjusted for Non-Leaking
| Year | Annual $ | # Tenants | $/Tenant Annual | $/Tenant Monthly |
|---|---|---|---|---|
| 2022 (1) | $10,125.80 | 25 | $405.03 | $33.75 |
| 2023 (2) | $14,359.81 | 25 | $574.39 | $47.87 |
| 2024 (3) | $16,513.79 | 25 | $660.55 | $55.05 |
| Average | $45.55 | |||
- We kept the 2022 amount as a fair representation of water consumption.
- Water consumption jumped notably beginning in Oct/23 so for the year 2023 we deducted the amounts for the last three months and applied instead an average of the first nine months ($1,196.65) for each of the last three months. Even that averaged monthly amount still represented a 41.8% increase.
- All of 2024 was literally double the previous year with an average $2,491.80/month. We instead increased the 2023 annual adjusted amount by 15%, which is still higher than the 12.4% increase levied by the water utility company.
We then averaged the three years (despite 2023’s 41.8% increase), which computed to $45.55 cost of water consumed per tenant per month over the three-year period.
Comparisons
[Utility company] rate Increase
If we had used 2022 as the baseline for normal consumption and increased the water bill by [utility company]’s annual rate increase then the 2024 rent water bill would have around $11,210 with an average monthly bill per tenant of $37.37.
Other Suite-Metered Tenants
We also compared this result to 28 water bills in 2024 from tenants in other buildings with water meters installed. Their monthly bills averaged overall at between $31.18 and $33.82 with average water consumption per rental unit of between 7 and 13 cubic metres per month.
First Bill
Your first water bill will be issued on January 15th for the billing period of your December install date to December 31st, 2024.
Billing Period and Due Date
Each monthly bill is for the previous month’s water consumption, and covers from the 1st to the end of the month. Tenants are billed on or about the 15th day of each month, with payment due 25 days or sooner after the bill issue date (not the date you receive the bill or view it).
Service Charge
A service charge is billed on a flat-rate basis. It recovers the fixed costs of billing administration and providing water and sanitary sewer services. This charge is billed even if no water is used.
Deposit
AMS has agreed to waive their account set-up fee and security deposit requirement for existing tenants (normally $150 to $300 per tenant).
Meter Installation Dates
The following is the schedule for the installation of the water meters in each unit, based on the estimation of completing 6 units per day. However, some units in the schedule overlap in case a unit is not completed on the scheduled day or, conversely, if the installer progresses more quickly than anticipated.
Day 1 – December 9th : Unit 1 to Unit 9
Day 2 – December 10th : Unit 6 to Unit 16
Day 3 – December 11th : Unit 12 to Unit 20
Day 4 – December 12th : Unit 19 to Unit 26
Start Date of Rent Reduction and Annual Rent Increase Notices
Beginning January 01, 2025, when you have paid your first water bill, you may make a one-time deduction of $45.55 from your LAWFUL (not 2% discounted) monthly rent. This adjusted rent amount is what you will pay until your next N1 annual rent increase.
The N1 annual increase notices that have already been issued to tenants with an anniversary date of January or February 01, 2025 will be adjusted and re-sent to you shortly, indicating your new rent.
Set Up Your Account with Alliance Metering
You should be able to set up your account after receiving this notice. Please set up your water billing account here: https://alliancemetering.com/new-account-set-up-form/
Alliance Customer Service
For any questions about your account set-up, or for account inquiries:
- Please call AMS at 519-888-5593
- Monday through Friday from 8:30 p.m. – 4:30 p.m.
- Or email AMS at customerservice@alliancemetering.com
Please feel free to reply to this email me if you have any questions.
Respectfully,
[Your name]
Rental Housing Provider
[Your phone number or contact details]
Appendix B
Personalized Tenant Letter
(Rent Reduction Calculation)
[Once all the meters had been installed, we informed each affected tenant as to what their new monthly rent rate was and when it would take effect.]
Hello [Tenant’s first name],
As per the [generic email date] email detailing the installation of water meters and tenants paying their own water bill as of [billing start date], we have adjusted your rent to reflect a rent reduction of $45.55. We then calculated your N1 annual rent increase for 2025. The provincially-approved annual rent increase for 2025 is 2.5%.
Your adjusted new rent calculation is as follows:
Your rent for January, February and March of 2025 will decrease from $1,371.04 to $1,326.40. Please keep in mind that the $45.55 reduction is off of your Lawful Rent amount, not the net rent amount after the 2% early payment discount.
Your rent will increase on April 01, 2025 from $1,326.40 to $1,359.51 (including 1 x parking and the 2% early payment discount)
| Last lawful rent | $1,356.16 |
| Water meter reduction | -$45.55 |
| Interim lawful rent | $1,310.61 |
| New lawful rent (+2.5%) | $1,343.38 |
| Early payment discount 2% | -$26.87 |
| Parking | +$43.00 |
Regards,
[Your name]
Rental Housing Provider
[Your phone number or contact details]
Appendix C
Early Rent Payment Discount ExplainedThis explanation has no bearing on the water meter business case but it should be briefly explained to help with business case analysis and calculations.
Charging a late fee for late rent payments is not permitted by law. However, offering an early payment discount is permitted. Therefore, we advertise the rental unit with the market rent and put an asterisk (*) beside the rent stating that the rent includes a 2% early payment discount. In the standard tenancy agreement (STA) the lawful rent is written in at 2% higher than the market rent I asked for.
Then, if the tenant doesn’t pay the rent on time, I remind them that their rent this month isn’t the amount they usually pay, which includes the early payment discount, but they owe the “Lawful Rent” amount as stipulated in the STA.
For example, if I agreed with the tenant that they should pay $1,250/month for a two-bedroom rental unit, then you’d divide that market rent by 0.98 %. In this example, the Lawful Rent would be $1,250/0.98 = $1,275.51, which is the amount you would input into the Lawful Rent section of the STA.
The tenant pays $1,250/month when they pay on time and $1,275.51 each time they’re late.
The Last Month Deposit (LMR) is automatically discounted since the LMR has not yet been earned by the housing provider and is therefore not “late.” When the tenant moves out and it is applied, then it is deemed to have been paid on time.