Renters hit by excessive body corporate utility costs

crikey.com.au 11/11/06 Corporate lawyer Adam Schwab writes:

If you thought owners were the only people being rorted by body corporate managers you are wrong – renters are also falling victim to controversial practices being undertaken by body corporates and their managers. Most notably, the dubious practice (by a relatively small number) of body corporates avoiding residential tenancies and gas industry laws to charge renters exorbitant amounts for utilities.

In a recent submission to the Victorian Essential Services Commission, the Tenants Union of Victoria has claimed that certain Victorian building complexes (including several Docklands developments and one development in St Kilda) supply and charge for hot water to individual apartments through a central boiler rather than through individual meters (this is also known as an embedded network). The body corporate effectively purchases the hot water (well, they actually purchase the gas and re-sell the hot water) and proceed to charge renters a significantly inflated price for any "hot water" or electricity purchased. Body corporates are able to charge inflated prices for hot water because only gas prices (not hot water prices) are regulated by the Gas Industry Act.

Further, according to the TUV, the metering systems in these embedded networks are not required to adhere to legal standards existing for normal gas and electricity distributors, raising serious doubts about the accuracy and reliability of billing systems.

As the tenants are required to use the "embedded network" in their building, they have no choice but to pay the massively inflated monopoly rates charged by the body corporate (for example, tenants are not able to change to the supplier of their choice like Origin, TXU or Victoria Electricity to obtain the regulated rate paid by everyone else). Some utility bills are believed to be as high as three or four times the rates charged by utility companies billing tenants directly.

It is also alleged that at the time of entering into leases, tenants are not made fully aware that the utility rates charged by body corporate will be far greater than if the tenant were able to go direct to the retailer.

While the TUV have recently been successful before the Victorian Civil and Administrative Tribunal in having certain charges relating to embedded networks reversed, it is believed that the practice is still continuing – with some tenants being unaware that they are being charged grossly inflated amounts for basic utilities.