Okay, so I'm going to leave my two cents here.
I'm European, from a left leaning, liberal (in the sense we actively recognize individual rights and liberties but one individual freedom can not tramble the next), and this exact same legal disposition exists.
Allow me to share the explanation I was given.
Fresh water is not easy to manage, sanitize transport and distribute. The operation is insanely complex and expensive, with huge expenses for quality control, infrastructure and machinery.
Water is a public service here; it is a guaranteed right. You need to reach extreme lengths to have your water service shut off, like having several months of delinquent bills.
however, all of this infrastructure needs to be paid for and it is paid through a serious of added charges, some percentually calculated based off the amount of water you use, others are fixed values charged as service fees (like sanitation and garbage collection).
This implies that if all the water consumed in an entire building was being paid by a single person, the water itself would be paid, but related costs would only be charged once, meaning the portion of money collected to cover the entire maintenance of the services would be severely reduced.
By enforcing that for each home there must be a separate service, the overall cost is diluted and the value service is maintained as cheap as humanly possible and the basic services are maintained as public services, out of the reach of private sector interest.
And, please take my word for, you do not want water, sewage or garbage collection controlled by private companies.
These are sectors where there is a limit for how much expense you can cut. It requires constant investment in machinery and infrastructure to just maintain operations. Improving efficiency requires even higher investment that is only recoupable after several years, if ever.
Privates work for profit. These entities work to just break even, although some can be highly profitable, but profit is always destined to reinvest.