Advantages and Disadvantages of Including Bills in Your Rent

Tenants’ needs and wants are always changing. A decade ago, broadband was a luxury, now it’s a necessity. Since the pandemic, properties with outside space are more popular than ever. So how can you make your rental property as attractive to tenants as possible?

Recent research by property bods at Rightmove has found that ‘bills included’ is now one of the most popular search terms currently used by prospective tenants, overtaking ‘pets’ and ‘garden’, marking yet another change in what renters want.

What does this mean for private landlords? Many landlords running Houses of Multiple Occupations offer bills included as standard practice, so why don’t all landlords?

In this quick read, we look at the pros and cons for landlords of including bills in the monthly rent.

PROS

Makes a property more desirable

By including bills, tenants know exactly what they’ll be paying every month, which could make a rental property more popular, meaning less risk of property staying vacant.

Attracts different types of tenants

Offering rent with bills included may attract a wider range of tenants, such as students and first-time renters. Younger tenants could find it easier to manage one lump sum as it saves them having to budget every month, and means they don’t have the hassle of finding utility providers or changing accounts over.

Less risk of unpaid bills

If bills are included then you, as the landlord, can ensure all payments are made on time. This makes things a lot easier at the end of a tenancy as there’s no need to check meter readings, change account holder names or dispute unpaid bills.

CONS

Less income

Utility costs can change on a month-to-month basis, especially now, when energy prices are at an all-time high. This may mean a landlord finds themselves paying out more for utilities during the winter months, therefore eating into their profits. Also, just because bills go up, it doesn’t mean you can pass this increase on to tenants. It’s important to check the rules about charging for utilities if you are offering all-inclusive rent.

More responsibility

Managing the bills for a property you don’t live in could prove complicated. You’ll need to stay on top of factors such as switching suppliers, the fastest broadband provider and so on. Also, if there’s an emergency such as a power cut or loss of water, then it will probably fall to you to contact the supplier as you’re the account holder.

Bill liability

If the worst happens and a tenant fails to pay their rent, not only will you lose out on your monthly income, but you’ll also have to fork out for their bills. Although your tenancy agreement can protect you against such losses, in the short term it will come out of your pocket.

If you’re a landlord looking for tenants, contact our team at Johnsons Property Consultants.