How Water Heater Rental Companies Screw Canadians

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How Water Heater Rental Companies Screw Canadians

Written by Matthew Taylor
Fact-checked by Caitlin Wood

How Water Heater Rental Companies Screw Canadians


Contract Lookout

When you buy a house in Canada, sometimes it can come with contractual obligations that you might not have foreseen. One of these contractual obligations may come from a water heater rental company. These companies provide, install, and maintain water heater tanks for homeowners and charge a monthly fee.

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These contracts often last a long time and you might find yourself committed to the contract for up to 18 years. These rental agreements can leave Canadian homeowners, especially in Ontario, where this deceptive practise is more widespread, feeling duped.

Learn more about the different costs of buying a house in Canada

How Water Heater Rental Companies Screw Canadians

When they buy a house, most consumers expect that the house’s water heater is part of the purchase price. Then they find out about the water heater rental agreement, which requires them to pay a monthly fee to a water heater rental company to keep using their water heater. These agreements can lock them in for a decade or more, and the rental company is even allowed to regularly raise rates.

If you take a close look at the rental agreement, however, you will likely find that you are allowed to buy the water heater outright. Doing so is usually more cost-effective, based on the cost of the heater and the length of the agreement. Because this information is often buried in the fine print of the agreement, the entire situation ends up feeling like a big scam.  

Check out how car dealerships screw over Canadians.

Cost of Renting vs. Buying

Choosing between renting or buying your hot water heater depends on many factors including how long you hope the tank will last or how long you plan on living in your current home. 

In Ontario, for example, it costs between $13 and $26 every month to rent a water heater, depending on the size of the heater. To buy a water heater tank can cost anywhere between $500 and $1,200, again, depending on the size of the heater, plus $300 to $400 in installation costs if you don’t plan to install it yourself. 

Find out if you should buy or rent a house.

Which Option is More Affordable?

Say that you are deciding between buying or renting a water heater for a large home. To buy it, you will have to pay $1,200 (on the high end) for the water tank plus $400 to have it installed, for a total of $1,600. If you decide to rent it, you will need to pay $26 per month. After 62 months, or 5 years and 2 months, the cost to rent or buy the water heater becomes roughly the same.

Water heaters typically last around 15 years, so assuming no maintenance is needed during that time, it makes more sense to buy your water heater outright if you are planning to use it for more than 5 years.

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Don’t Forget Maintenance

Even if renting your water heater is more expensive, the advantage of renting over buying is that you do not need to worry about maintaining or replacing your water heater. The company that owns it will take care of that. The extra cost of renting a water heater can be thought of like also paying for insurance that covers any repairs or replacements needed. If you buy your water heater, once the warranty expires, you are responsible for all repairs and replacing it. 

How Can You Cancel Your Hot Water Heater Rental Contract?

There are two ways you can cancel your hot water heater rental contract: by paying the cancellation fees or by buying out the water heater.

Your rental contract should include a clause for early cancellation, including how much you have to pay to cancel your contract. Look through your paperwork so you know your rights and responsibilities, which will help you to avoid extra fees being added to your account. You will have to contact the company you are renting your hot water heater from, pay the cancellation fees, and give them back your water heater.

You can also choose to buy out the rest of your contract. Your rental contract will generally include a buyout clause that outlines how much you will need to pay to buy out the water heater. This information can also usually be found either on the supplier’s website or by contacting them directly. Once you buy out the water heater, it is yours to keep. 

Want to switch your home insurance providers? Check out how to cancel your home insurance contract.

Bottom Line

Water heater rental companies lock homeowners into rental agreements lasting over a decade, and they can regularly raise rates with little oversight. These agreements last even after a house is sold, which can deceive the new homeowners because they assume that the hot water heater is paid for and included in the house’s purchase price. The agreements list ways that homeowners can get out of them, including buying the heater outright or paying cancellation fees, but this information is often buried in the fine print of the agreement. The whole thing can feel like a scam. If people know about water heater rental agreements and how they can get out of them, they can make an informed decision on whether to rent or buy a water heater.

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