Utility Rate Hikes: Renters vs. Owners — Who Loses More?
As housing costs climb, the percentage of income spent on rent, mortgages and utilities has increased.
Mortgage rates are higher than they were six years ago, home prices have risen and more recently the cost of gas and electricity has skyrocketed. Utility rates have increased at double the rate of inflation in 49 states, according to American Progress. New Jersey alone saw a 16.9% increase in energy costs from 2024 to 2025, according to NBC Philadelphia. The pressure of higher energy bills isn’t only felt by homeowners and landlords. It gets passed down to renters. But who pays more?
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Owners Feel Utility Hikes First
Homeowners often feel utility hikes first because the increases appear directly on their energy bills. Owners are also responsible for the utilities needed to operate the entire property.
Homeowners can replace inefficient appliances, improve insulation or upgrade heating and cooling systems. However, those projects require money upfront, and owners must keep paying higher rates until the improvements reduce consumption.
Homeowners Pay More in Utility Bills Than Renters
FRED data showed that owners spent an average of $5,649 a year on utilities, fuel and public services, while an additional FRED resource charted renters as spending an average of $3,049, according to the 2024 Consumer Expenditure Survey from the Bureau of Labor Statistics, cited by the Federal Reserve Bank of St. Louis. That means homeowners pay $2,600 more annually.
One reason may be that homeowners may own larger residences that use more energy.
Landlords Pass Down the Costs to Renters
Landlords often receive the total bill and divide it among the tenants. This is done through individual meters or a Ratio Utility Billing System. However, tenants have found these billing systems confusing, and may be charged administration fees and common area utilities, even when they don’t use them.
The problem is landlords aren’t always transparent about billing. After receiving many complaints from renters, Washington, D.C. Attorney General Brian L. Schwalb issued an alert to landlords and tenants, calling on the former to provide greater transparency and disclosures so the latter can understand how their utility charges are calculated, and avoid overpaying.
Schwalb told tenants to review their leases so they know what they are charged for, how bills are calculated and which common charges they will be responsible for.
He also suggested that renters check their bills for accuracy and ask to see the building’s average monthly utility bills. If your landlord is unresponsive, he encouraged tenants to contact their OAG's consumer hotline.
Renters Lose More if They Need To Move
Homeowners can invest in energy-efficient appliances, windows and insulation that can lower the cost of their energy bills and they can deduct the expenses from their taxes.
Renters can use strategies to lower utility bills, such as installing better window treatments or turning down or lowering their AC or heat when they’re not home if they can control those systems. However, if they live in an older home with drafty windows or poor insulation, those savings can go right out the window.
Moving to another rental might not be an option for some renters because it comes with expensive upfront costs, such as hiring a mover, application fees, security deposits and first and last month’s rent, according to Harvard University’s Joint Center for Housing Studies, making it nearly impossible for some renters to relocate.
Final Thoughts
In the short term, homeowners feel utility hikes harder. However, renters lose more over time because the costs compound into rent. Increases are harder to avoid as housing becomes less affordable as utility costs rise.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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