Water Charges in NZ Rentals: What Landlords Can (and Can't) Charge

The short version: you can charge your tenant for the water they use - the metered consumption charge - but only if the property is separately metered. You cannot pass on the fixed line charges or the rates-funded part of the bill; those stay with you. Get the split wrong and you are either out of pocket or unlawfully overcharging, and the second one is a Tribunal claim waiting to happen.

If you are a landlord working out what you can put on the tenant, or a tenant staring at a water bill that looks too high, this tells you exactly where the line sits under s.39 of the Residential Tenancies Act (Tenancy Services - Water charges). I have split these bills by hand on my own places, so I will show you the part most people get wrong, and how RentManager keeps the on-chargeable usage separate from what you absorb.

The Basic Rule

A landlord can require a tenant to pay for water usage if and only if:

1. The property has a water meter that measures the property's consumption separately from other properties, and
2. The water is metered and charged on a consumption basis by the local council or water provider.

If both conditions are met, the landlord can pass the metered water usage charges to the tenant.

The landlord cannot pass on:

• Fixed water supply charges (line charges, base charges)
• Any portion of water charges that is not based on actual usage
• Sewerage or wastewater charges (these are the landlord's responsibility)

Properties Without Separate Meters

If the property shares a meter with other units (common in older apartment buildings or some townhouses), the landlord cannot charge tenants for water at all. All water costs are the landlord's responsibility.

In these situations, the water cost is factored into the rent. When tenants ask why they pay for water at one property but not another, this is usually why.

How to Set Up Water Billing Correctly

If you are entitled to charge for water usage:

1. Include a clause in the tenancy agreement stating that the tenant is responsible for metered water usage charges
2. When you receive the water bill, separate the usage portion from any fixed charges
3. Invoice the tenant for the usage portion only, with a copy of the relevant section of the council invoice as evidence

Do not just forward the full council water invoice and ask for payment. Fixed charges must be deducted first, and failure to do so is a recoverable overcharge under the RTA.

Auckland and Wellington: Key Differences

Water billing varies by council. In Auckland, Watercare charges separately for water and wastewater. Landlords who pass on wastewater charges to tenants are in breach of the RTA. Only the metered water usage portion is passable - not the wastewater component.

In Wellington, Wellington Water issues invoices to property owners. The breakdown of usage vs. fixed charges is on the invoice. Check before charging.

Some smaller councils bundle water and sewerage into a single unmetered rate (a flat annual charge included in council rates). In these cases, there is no metered usage to pass on, and the landlord bears the full cost.

Disputes and Overcharges

If a landlord overcharges for water - for example, by including fixed charges or sewerage - the tenant can apply to the Tenancy Tribunal for a refund. The Tribunal regularly awards refunds of overcharged water costs, and can also award exemplary damages in clear cases of wilful non-compliance.

Keep records of every water invoice and how you calculated the tenant's portion. If challenged, you need to show exactly what was charged and why.

Healthy Homes Standards and Water

The Healthy Homes Standards do not directly regulate water billing, but they do require adequate drainage and the elimination of moisture ingress - issues that can arise from plumbing defects. A landlord who passes on water charges for a property with leaking pipes may face both a water billing dispute and a Healthy Homes compliance issue.

Tracking water bills, passing on the right amount, and keeping records of invoices is time-consuming across multiple properties. RentManager lets you attach documents to tenancies and properties, making it straightforward to keep your billing records in order.