What is RUBS and how can it lead to tenants leaving?
What is RUBS?
Ratio Utility Billing Systems (RUBS) have become a popular way to allocate utilities to tenants when the units are not sub-metered. It reduces the risk of the variable cost of utilities for property owners.
The core benefit of RUBS is that it shifts the responsibility of utilities from the property owners to the group of tenants. Each monthly water bill is split up and billed to each tenant based on a number of different metrics such as apartment square footage, number of bathrooms, etc.
Sounds great, what are the downsides?
RUBS shifts the responsibility away from the owners who have the ability to do something to reduce utility costs, to the tenants who individually have no will or ability to act on the bill. The two reasons for this are:
- Diffusion of Responsibility: Because the tenants are part of a group, no particular tenant feels responsible for reducing water usage.
- Learned Helplessness: Because tenants have little ability to impact the total water bill (e.g. only 1 of 100 tenants who contribute to water bill), tenants begin to feel like they have no ability to affect the water bill in the first place.
With nobody willing or able to act, utility costs begin to increase as leaks and inefficient usage become rampant. This can lead to damage to the building, excessive water waste, and escalating utility bills for tenants. Rising water bills results in tenant dissatisfaction, distrust, and eventually tenant turnover which costs property owners $1,000-$5,000 per tenant lost.
For example, let's take a building that has 100 units, and 20 of the units have toilets that are leaking (20% of toilets on average leak). These leaks will result in an extra $30,000/year added to the water bill. With nobody having the proper incentive to fix them, these leaks and costs will only continue to increase over time. In the worst case, one of these leaks is actually leaking into the walls or foundation causing damage, but since nobody's trying to fix the leaks, they just keep going!
To recap, RUBS hurts:
- Tenants because utility bills will rise due to leaks. This causes tenants frustration and even mistrust of the owners.
- The owner because of the potential damage to the property, and increased tenant turnover.
- The environment because water leaks waste up to 1 trillion gallons in the US, and if nobody is properly incentivized to fix them, they’ll just keep wasting water.
What are some alternatives?
Sub-metering is a great alternative, especially for new builds. Sub-metering makes sure each tenant pays for exactly their usage. This usually leads to a significant reduction in usage. Unfortunately, sub- metering can be prohibitively expensive or even impossible to implement for pre-existing buildings.
The best solution for pre-existing buildings is for the owner to implement active monitoring solutions. A monitoring solution can be implemented while using RUBS. Active monitoring solutions, like NOWis, will alert owners whenever a leak is detected, and in many cases localize the leaks for a quick fix. Tenants appreciate that leaks are quickly resolved with no effort on their part. Owners can continue to use RUBS without the downsides. Last but not least, water conservation is great for the environment!
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