How Submetering Can Save You Thousands on Utility Costs
See real numbers on how submetering can recover thousands in utility costs for Ontario landlords. Includes example calculations for 5-unit, 10-unit, and 20-unit buildings.
Every landlord who pays utilities for their tenants knows the sting of watching hydro bills climb year after year while rent increases are capped. Submetering flips that equation. Here is exactly how much it can save you, with real numbers for different building sizes.
The Utility Cost Problem for Ontario Landlords
Ontario utility costs have been rising steadily for over a decade. Electricity rates, water and sewer charges, and natural gas prices all trend upward. Meanwhile, the annual rent increase guideline for 2025 was just 2.5 percent. That gap between rising costs and limited revenue growth is where landlords lose money.
If you are paying utilities on behalf of your tenants, those costs come directly off your net operating income. And unlike maintenance or other variable expenses, you have almost no control over how much your tenants consume. One tenant blasting the AC all summer or running space heaters all winter can cost you hundreds of extra dollars per month.
Submetering solves this by shifting consumption costs to the people who actually control the thermostat.
How Submetering Saves You Money
The savings come from two sources, and most landlords underestimate the second one:
1. Direct Cost Recovery
When tenants pay for their own utilities, you stop absorbing those costs. This is the obvious savings: the money that was coming out of your pocket now comes from the people using the electricity, water, or gas.
2. Reduced Consumption
This is where the magic happens. When people pay for what they use, they use less. Studies consistently show that submetered tenants reduce their consumption by 15 to 30 percent compared to tenants on bulk billing. Lights get turned off. Thermostats come down a degree or two. Windows stay closed when the heat is on.
That reduced consumption benefits you even on common areas and building systems that remain on the master meter.
Real Numbers: 5-Unit Building
Let us start with a small building to show how the math works.
Before Submetering
- Monthly electricity bill (entire building): $1,800
- Common area share: $300 (hallways, laundry, exterior lighting)
- Unit consumption share: $1,500 ($300 per unit average)
- Annual unit utility cost to landlord: $18,000
After Submetering
- Tenants now pay their own electricity: Unit costs shift to tenants
- Consumption drops 20% due to conservation: Total unit consumption falls from $1,500 to $1,200/month
- Common area costs drop slightly: $300 to $270/month (reduced overall building load)
- Annual savings to landlord: $18,000 in recovered costs, minus about $3,240 in remaining common area costs
- Net annual recovery: Approximately $14,760
Installation and Service Costs
Typical cost for a 5-unit electricity submetering installation: $2,000 to $4,000 (one-time), plus ongoing service fees. Most providers like Axis Meter bundle installation costs into their service agreements, reducing the upfront investment.
Payback period: 2 to 4 months.
Real Numbers: 10-Unit Building
This is the sweet spot for submetering ROI. The building is large enough to generate significant savings but small enough to keep installation straightforward.
Before Submetering
- Monthly electricity bill: $3,500
- Common area share: $500
- Unit consumption share: $3,000 ($300 per unit average)
- Monthly water/sewer bill: $1,200
- Annual utility cost to landlord: $56,400
After Submetering (Electricity + Water)
- Electricity unit costs shift to tenants: $3,000/month recovered
- Water costs shift to tenants: $900/month recovered (common area water stays with landlord)
- Conservation effect (20% reduction): Building-wide consumption drops
- Annual recovery: Approximately $46,800 in shifted costs
- Remaining landlord costs (common areas): Approximately $8,400/year
- Net annual savings: Approximately $38,400
Installation Costs
Electricity + water submetering for 10 units: $5,000 to $10,000 one-time, depending on building configuration and meter types.
Payback period: 2 to 3 months.
Real Numbers: 20-Unit Building
At this scale, submetering becomes a no-brainer. The numbers are dramatic.
Before Submetering
- Monthly electricity bill: $6,800
- Common area share: $800
- Unit consumption share: $6,000 ($300 per unit average)
- Monthly water/sewer bill: $2,400
- Annual utility cost to landlord: $110,400
After Submetering
- Electricity unit costs shift to tenants: $6,000/month recovered
- Water costs shift to tenants: $1,800/month recovered
- Conservation effect: 18-25% reduction across the building
- Annual recovery: Approximately $93,600
- Remaining landlord costs: Approximately $15,600/year
- Net annual savings: Approximately $78,000
Installation Costs
Full submetering for 20 units: $10,000 to $18,000. Again, providers like Axis Meter often structure this as part of the service agreement rather than a large upfront payment.
Payback period: 2 to 3 months.
The 5-Year View
Submetering is not just about year-one savings. The benefits compound over time because utility rates keep rising but your exposure stays flat.
Consider a 10-unit building over five years:
- Year 1 savings: $38,400
- Year 2 savings (assuming 4% utility increase): $39,936
- Year 3 savings: $41,533
- Year 4 savings: $43,194
- Year 5 savings: $44,922
- Total 5-year savings: Approximately $207,985
That is over $200,000 in recovered costs from a single 10-unit building. For landlords with multiple properties, the numbers become transformative.
What About the Rent Reduction?
Fair question. Under Ontario's Residential Tenancies Act, when you submeter a building where utilities were previously included in rent, you must reduce the rent to reflect the transferred costs. This is not optional.
However, the rent reduction is based on the historical utility cost per unit, not on future costs. Since utility rates continue to rise, the savings grow larger every year while the rent reduction stays fixed. Within 12 to 24 months, most landlords are well ahead.
For new tenancies, you can structure the lease with submetered utilities from the start, avoiding the rent reduction issue entirely.
Impact on Property Value
This is the piece that many landlords overlook. Commercial and multi-residential properties are valued based on net operating income (NOI). When you reduce expenses by $38,000 per year on a 10-unit building, you are not just saving $38,000. You are increasing the property's value.
Using a standard capitalization rate of 5 percent:
- $38,400 NOI increase / 0.05 cap rate = $768,000 increase in property value
Yes, that is correct. Submetering a single 10-unit building can add three-quarters of a million dollars to your property's appraised value. This matters enormously if you are refinancing, selling, or building a portfolio.
Case Study: A Real Ontario Building
A landlord in the Greater Toronto Area owned a 12-unit apartment building built in the 1970s. All utilities were included in rent. Here is what happened when they submetered:
Before
- Monthly utility bills (hydro + water): $5,200
- Annual utility expense: $62,400
- Average rent per unit: $1,650/month
The Process
- Hired Axis Meter for full-service submetering
- Installation completed in two days with minimal disruption
- Tenants received 60 days' notice and individual meetings to explain the change
- Rent was reduced by an average of $150/unit to reflect the transferred utility costs
After (First Year)
- Tenant utility payments covered $48,000 of the annual costs
- Building-wide consumption dropped 22 percent
- Landlord's remaining common area costs: $9,600/year
- Rent reduction total: $21,600/year (12 units x $150 x 12 months)
- Net savings in year one: $31,200
Year Three
- Utility rates had risen 12 percent since submetering was installed
- Tenant bills adjusted with rates (tenants pay current rates)
- Landlord's common area costs rose slightly but remained manageable
- Rent reduction stayed the same ($150/unit)
- Net savings in year three: $39,800
By year three, the landlord was saving nearly $40,000 per year on a 12-unit building. The installation cost was recovered in the first two months.
How to Get Started
If these numbers resonate with you, here is what to do next:
- Calculate your current utility costs. Pull your last 12 months of utility bills and calculate the total. Divide by the number of units for a per-unit average.
- Talk to a submetering provider. Get a site assessment and quote. A provider like Axis Meter will evaluate your building's electrical panels and plumbing to determine the best approach.
- Review your leases. Determine which tenants have utilities included and plan for the transition. Consult with a paralegal or lawyer familiar with the RTA if needed.
- Run the numbers. Use the examples above as a template. Your actual savings will depend on your building's specific consumption patterns and local utility rates.
- Track everything. Use BricksAbove to monitor your expenses, track your NOI, and document the before-and-after impact. Good records make refinancing conversations much smoother.
Common Objections (and Why They Do Not Hold Up)
"My building is too old."
Most submetering installations work perfectly in older buildings. CT meters install at the electrical panel without rewiring. Water meters can be added to existing plumbing. Age is rarely a barrier.
"My tenants will leave."
In practice, tenant turnover does not increase meaningfully after submetering. Tenants understand the fairness argument, especially when combined with a rent reduction. And in Ontario's tight rental market, tenants are not leaving over a $100/month hydro bill.
"The upfront cost is too high."
With payback periods of two to four months, submetering has one of the shortest payback periods of any building improvement. Many providers also offer financing or roll costs into the service agreement.
"I only have a few units."
Even a 3-unit building can benefit from submetering. The per-unit savings are the same regardless of building size. The installation cost per unit may be slightly higher for smaller buildings, but the ROI is still strong.
Want to see how your property stacks up financially? Our free cash flow calculator lets you plug in your income and expenses to see your true monthly returns. It works as a comprehensive rental income calculator that accounts for vacancy, maintenance reserves, and operating costs.
The Bottom Line
Submetering is one of the highest-ROI improvements a landlord can make. The math is clear across every building size: 5 units, 10 units, 20 units, and everything in between. You recover utility costs, tenants conserve more, your NOI increases, and your property value goes up.
Stop subsidizing your tenants' electricity bills. The numbers do not lie, and the process is easier than you think. Get a quote, run your own calculations, and see what submetering can do for your portfolio.
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