Surging Heating Costs Squeeze Landlords and Threaten Higher Rents
From homeowners renting out spare rooms to publicly traded real estate investment trusts, landlords in colder areas of the US are bracing for their heating costs to soar this winter.
Household bills for natural gas and heating oil are expected to be nearly 30% higher nationally than they were last year, according to federal government projections, and electricity prices are also on track to rise. Demand could be higher, too, since temperatures are forecast to be slightly colder through March than they were last winter.
That will add to property owners’ burdens after more than a year of high inflation has squeezed their budgets for supplies, insurance and labor. For renters who’ve experienced dramatic increases in leasing costs since the start of the pandemic, it’s yet another expense they can expect their landlords will try to pass onto them.
“Many of us include heat in our rents, and rents are going to have to go up to keep up with the escalation of costs,” said Allison Drescher, president of the Small Property Owners Association in the Boston area.
The Northeast will be hit especially hard. With its cold climate and older, less energy-efficient housing stock, the region’s household gas and electric bills through the winter are typically the nation’s highest. The area also has more homes that use oil — the most expensive fuel — than anywhere else in the country. Those households are expected to get stuck with an average bill of $2,354 for October through March, almost 27% higher than last winter, according to the US Energy Information Administration.
Any rent hikes spurred by ballooning heating costs will stack on top of substantial increases tenants have endured during the pandemic leasing boom. Since March 2020, rents jumped 6.5% in Boston, 13% in New York City and a whopping 32% in Manchester, New Hampshire, according to November data from Apartment List.