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Water Heater Rentals: Do Ontario Residents Get Hosed?

As an Albertan who writes a column for an Ontario-based newspaper, I’m often reminded of the many differences between our two provinces. Health care premiums, HST, and land transfer taxes aren’t part of the Alberta landscape. Another difference I’ve observed is that many Ontario residents rent a water heater for their home, but in Alberta everyone owns. I was curious, so I looked into why.

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Ontario residents can rent a water heater from Direct Energy or Reliance Home Comfort for somewhere between $13 and $26 per month, depending on the size of the tank. Buying a water heater up-front can set you back about $800 to $1,200, plus an additional $300 to $400 if you pay to have it installed.

Owning trumps renting at about the six or seven year mark, and over its typical 15-20 year lifespan the total cost of renting might pay for the water heater three or four times. So why is renting so common in Ontario?

Do Ontario Residents Get Hosed When It Comes To Water Heater Rentals?

Neil Simpson of Port Perry, Ontario emailed me and said that renting a water heater really isn’t so much an Ontario habit as a requirement.

“How many houses have been built in the past 50 years where there wasn’t a rental water heater in place?

Once there, the cost of buying out the contract is exorbitant…the last thing one needs when buying a house is to add yet another bill.

So, saddled with the rental from day one, most stick with it.”

With renting you don’t have to worry about maintenance or replacement costs, since that’s part of the service agreement, but when you own a water heater you’re on the hook for any issues that arise after the warranty expires.

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Jamie and Angela Larsen, aged 38 and 35, moved from Ontario to Alberta three years ago.  While living in Ontario, the couple rented a water heater in their Mississauga condo, taking over a rental contract from the previous owner.

They looked into buying a water heater, but due to the high cost they decided to keep renting.  They liked that if something went wrong with the heater, the company would be on the hook to fix or replace it.

“We didn’t plan on staying at the place for that long, so owning would have never paid off,” said Mr. Larsen.

An $18 flat fee per month included the water heater and 24-hour service, if required.

Direct Energy and Reliance each list numerous reasons why renting a water heater is the better option: An affordable monthly rate, convenient billing, same-day service if you have any problems, no charge for parts and labour, and the peace of mind that you’re protected from costly repairs.

It reads a bit like an extended warranty sales pitch, and home owners should be wary of aggressive sales tactics designed to steer you toward renting, especially when these companies go door-to-door to try and sign you up.

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Back in 2012, the Competition Bureau, an independent law enforcement agency, took action against both Direct Energy and Reliance for water heater return policies that were nearly impossible to break without aggressive retention tactics and stiff penalties.

Direct Energy operates in both Ontario and Alberta, but despite more than one million water heater rental customers in Ontario, the company doesn’t rent water heaters in Alberta.

One reason why Albertans don’t rent is simply due to habit – it’s never been done before.  Ontario residents have been renting water heaters for close to 50 years and are comfortable doing so.

Now living in Lethbridge, Alta with their three children, the Larsen’s own the water heater that came with the house they bought in 2011.  If a rental option became available in Alberta, Mr. Larsen said he’d probably stick with ownership because he doesn’t like to be tied into a contract.

Do Ontario residents get hosed when it comes to water heater rentals?

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24 Comments

  1. Liz on June 13, 2014 at 5:23 am

    Actually, Direct Energy can charge quite a bit more. I moved into a small house (new build) where the tankless water heater was $42 a month without HST.

    • Robert on June 13, 2014 at 7:05 am

      That is insane! Strange thing to rent at such a price. I think mine cost a little over 2k to install and they seldom need maintenance in the first 20 years.

      • Mark L on September 28, 2017 at 8:09 pm

        Where I live a tankless unit costs $4500 for supply + install and has a 1 year labour warranty (5 years parts). They also fail under 10 years due to the water hardness. We rent our tankless for $39.99/mo, got our first year free, get it inspected and cleaned every year, and the unit was just replaced after year 7. I know your comment was from 3 years ago but I would consider buying something that expensive insane.

        • Robert on November 19, 2017 at 3:43 pm

          Consider buying something that expensive insane …. you mean like a house or a car?

          Tankless water heaters are in general way less than 4500

  2. Robert on June 13, 2014 at 7:02 am

    I have lived in Ontario all my life and I have never found it hard to move away from rentals, but I have never dealt with Direct Energy.

    You get hosed if you buy a tank. Incredible that these tanks are still installed. For a higher cost you can buy an on-demand heater which pays for itself in 3 to 5 years. No monthly rentals and not paying to keep all that water hot all the time. Endless hot water if you ever need it running for hours.

    • Echo on June 13, 2014 at 7:15 am

      Hi Robert, how is the water temperature in the winter? Does it take a long time to heat up?

      I haven’t found a more recent study but Consumer Reports said the pay back on a tankless water heater was 22 years! That was back in 2008 or 2009, though. Hopefully they’ve come down in price and improved efficiency.

      • Robert on June 13, 2014 at 10:59 am

        Mine runs fine with 2 pulls on it. E.g. 2 of showers, dishwasher and washing machine. Winter is not a factor. Payback depends on the differential vs buying a tank. This price difference has narrowed a lot. I do not have current numbers for my area. When I ran the numbers in 2003 it was a 5 year payback or less and tanks were poised to rise in price a lot. I use gas, so I did not price electrical.

        You have more people in the house and may like the feature that it never runs cold (you may hate that when the teenagers start taking 45 minute showers!).

  3. Tracey H on June 13, 2014 at 7:21 am

    I think a lot depends on the local water. We’ve lived in a city with hard water for years (in ON) and have had several problems with our rental heaters (different houses) over the years, some in fairly new heaters. I’m not sure if we’re ahead or behind moneywise, but it’s a simple call to the company and they’re out quickly to fix it.

  4. mike on June 13, 2014 at 8:49 am

    Answer depends on where you live. In Kitchener, municipal utility charges less than prices you are citing, plumbers agree that heaters never last long enough for break even on cost of purchase and installation

    • Bet Crooks on June 13, 2014 at 9:28 am

      Well I guess we’d better start worrying then, because we just paid out having our water heater (12 year tank) installed from Home Depot 3 years ago. It’s been fine so far.

      • Angela on August 14, 2019 at 11:16 am

        My hubby bought one from there too, six years ago. It’s been leaking from the bottom for over a month. Now he’s looking at rental like we use to have…they service without you paying out. A service call is already near $200. if not more.

  5. Loonie Lover on June 14, 2014 at 9:03 am

    I don’t know if you approve of specific stocks being mentioned in the comments section, but ECI (Enercare) (formerly Consumers’ Waterheater Income Fund) does the same thing. They also have a sub-metering business, to allow apartment-dwellers to be charged for exactly what they use.

    I used to own this, but unfortunately, I got when it took a bit of a dip a few years ago. The chart – and yield – look pretty good. I don’t own this now.

  6. MArko on June 14, 2014 at 11:29 am

    One of my best performing stocks has been ENERCARE eci.to. water heaters rentals. Money in the bank. I rent one, so I consider this investment a hedge.

  7. Max on June 14, 2014 at 10:30 pm

    Just another proof that Ontario is being run by various corporations to the detriment of the average Ontarian…..pathetic

  8. Grahame on August 2, 2014 at 12:03 pm

    After 20 years of renting the same water heater from Direct Energy I decided to give them a call and get a new one installed free. After a year I purchased it from them for $900 and hope to get another 20 no maintenance years.

  9. Jim George on May 16, 2016 at 8:38 am

    Buyout price quote for water heater $3600.
    I have been moved to a new builder home where the builder had entered into a contract to have a Rental water heater tank from a service provider. A month later after I moved in to the new home, the service provider send me a rental agreement which is good as long as the water heater is working good. The monthly rental charge is $42. I asked for a buyout deal. They were very hesitant to tell me the buyout price. Tried to discourage me with warning such as excessive repair cost that I may have to incur in case the water heater breakdown; and offered 4 months of free rental. Finally, based on my persistent attempt they gave me a price, which is $3600 including HST. I feel like they are overcharging me; is there anything can be done. Please advice.

    • Clint on September 5, 2017 at 11:59 am

      In Alberta, a 40 Gal water tank is about $600 on average. I just purchased a tank-less that has the capacity for a 4 bathroom home. I am moving to Kenora Ontario, and at the rental prices for a tank here, this one I brought with me will pay for it several times over by the time I need to replace it. At $3,600 bucks, you could have bought 3 tank-less systems and had endless hot water, higher efficiency than with a tank (mine is 96% efficient), and runs on GAS so is much less expensive per month than an electric tank if that is what you have.

  10. JerryJ on June 1, 2016 at 4:06 am

    I’ve had my rental for 12 years so far, Reliance claiming that their “special water heaters” are unlike the ones we buy (double anode and double insulated). and last for 16 years. At $16.09 month I’ve paid roughly $2304 and my buyout is $340. So the numbers tell me that $340 for 4 more years and then, in essence I’d have to buy a new water heater and start the process all over again? However after their 16 year duration, do you think they’ll CALL ME and suggest I need a new water heater as my current water heater has timed out? I highly doubt that.

    IMO these are legal scams and I don’t know who is protecting whom. One thing that really bothered me was when I asked them about a leak or sudden burst and I end up with a flood it would wreck my rec-room. The simply answered by saying ” that’s why you have house insurance”. I told them if I owned the heater I’d be on top of any required maintenance to prevent such a disaster and I avoid making those insurance claims. But you guys won’t even come out for a maintenance check, knowing how long water heaters last.. I told them that they own the heater and it’s their responsibility for service an maintenance, so where is YOUR responsibility?
    It’s nothing short of a ping-pong game of responsibility and liability. I’m retired and don’t have all the money in the world.
    But now, I’m trying to figure out whether to buy out and buy another NEW or keep renting as another NEW can be upwards of $1,000plus, pending model

  11. Curt on December 15, 2016 at 8:12 pm

    The rental tanks are very inefficient compared to what is available and now required. This is a significant incentive for the company to keep old tanks in place, increasing the risk to homes due to failure and the significant increase in the long term cost of operation. Own your own tank….

  12. Robert Morgan on January 25, 2017 at 4:09 pm

    When I purchased my previously owned house in April 2005, I installed a 40 gallon electric water heater. It cost under 500 dollars including installation. It’s been running perfectly for 12 years.

  13. Mark Weston on October 24, 2017 at 9:30 am

    I pay$ 31.32 a month from Reliance cant wait to get rid of that bill

  14. Rick Bester on October 9, 2018 at 3:17 pm

    Rented from Reliance for over 12 years and the heater blew a hole and flooded finish basement , so much for service and mantrance,bought one from Lowe’s good bye rental . This was second one that burst and caused damage.

  15. Kurt on November 23, 2019 at 5:58 am

    You don’t have to assume the rental agreement of previous owner. Simply tell the company to pick up their product, they won’t be getting any money; they’ll schedule an appointment and be on their way.

  16. Luc on December 15, 2019 at 7:36 am

    I worked in bush camp for many year. I flew helicopter from coast to coast to coast. Most remote camp have tankless hot water heater. There was 10 or more workers at the camp and I don’t remember having problem with the hot water heater. Maybe it’s the brand, I should have asked but didn’t. I own my hot water heater after arguing with Enercare for many months. I read that in Europe most people own tankless hot water heater, more energy efficient. Maybe they are more concerned about the environment than us Canadian.

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