Question: I am a landlord who owns and manages a couple of four-plexes. I have always paid for all the utilities — garbage pickup, electricity and water — for my tenants. However, I started to notice recently that the utility bills were getting very expensive at my properties. Some tenants seem to be running the heat even when the temperature is in the high 60s, while others seem to be using a lot of water. Because the utility costs are so high, I am thinking of increasing the rent on my apartments by $80 per person to help defray these costs. My wife, however, is concerned that we might get in trouble under the Fair Housing laws for doing this. Are we allowed to institute such a policy?
Answer: Your wife is correct that you should be careful about making such a policy. Charging rent on a per-person basis, which in essence is what you propose doing, may constitute discrimination on the basis of familial status. Under the Fair Housing laws, if a landlord establishes a rule or policy that has the effect of discriminating against a protected category of people, even if the rule or policy does not expressly discriminate against anyone, the policy or action can still be unlawful.
Here, although you are interested in establishing a neutral policy that would apply to all of your tenants equally, regardless of their protected class, your policy could have the discriminatory effect of unfairly penalizing families with children. And, as you probably know as a housing provider, families with children are a protected group under the Fair Housing laws.
Your policy may have a discriminatory effect on families with children because you would be charging a family of five, for instance, an additional $400 for a two bedroom unit, while you would be charging a couple only an additional $160 for that same two-bedroom unit.
Because renting to families with children, almost by definition, means that more people will be living in a single housing unit compared with tenants without children, charging rent per person will mean that most families will have to pay higher rent to live in the same apartment than tenants without children would. Statistics tell us that such a policy, applied broadly, would effectively deny families with children housing opportunities on the same footing as families without children.
Moreover, the higher rent may not be justified by business considerations because (1) it is wrong to assume that families with children will use more utilities than other tenants; and (2) imposing a flat $80 increase probably does not accurately reflect the additional cost incurred by that family.
What if the family of five includes a newborn who does not use any extra utilities? Or one of the individuals in the couple's unit likes to take very long showers? What about the possibility that the family of five is very eco-conscious and always turns off lights in rooms they are not in, while the couple leave lights on all the time and like to keep their unit at 70 degrees?
On the other hand, you can charge for the utility costs of your tenants if it is based on the actual costs they incurred. So if you did a breakdown of the utility costs per unit, you can use those breakdowns to request that tenants pay for some of their utility costs.