Tenants’ needs are constantly evolving. A decade ago, broadband was considered a luxury; now, it’s a necessity. Since the pandemic, properties with outdoor space have surged in popularity as renters seek more flexible living arrangements. So, as a landlord, how can you make your property stand out in this ever-changing market?
Recent research by Rightmove reveals that “bills included” has become one of the most searched terms by prospective tenants, surpassing previous favorites like “pets allowed” and “garden.” This trend signifies a shift in renters’ priorities. But what does this mean for landlords? Should you consider including bills in your rental property, or are there hidden pitfalls?
In this article, we’ll weigh the pros and cons of including bills in rent, helping landlords decide if it’s the right move.
Are Bills Included with Rent?
Many landlords wonder whether they should include bills in the monthly rent. It’s common practice in Houses of Multiple Occupation (HMOs), where offering all-inclusive rent packages is almost standard. But why don’t all landlords follow suit? While it can make a property more appealing, it comes with added responsibilities and financial risks. Let’s explore the pros and cons in more detail.
The Pros of Including Bills in Rent
1. Makes a Property More Desirable
One of the biggest advantages of including bills is that it makes the property more attractive to potential tenants. By offering an all-inclusive rent, tenants have the certainty of knowing exactly how much they’ll need to pay each month. This removes the hassle of managing multiple payments and makes budgeting easier, which is especially appealing to those looking for simplicity. It can also reduce the chances of your property sitting vacant, as renters are more likely to choose a property where costs are predictable.
2. Attracts a Broader Range of Tenants
Properties with bills included tend to attract a wider variety of tenants, including students, first-time renters, and young professionals. Many of these groups prefer the convenience of paying a single lump sum rather than juggling multiple utility providers. For younger renters or those unfamiliar with managing household bills, an all-inclusive rent can be a major selling point, simplifying their financial management.
3. Lower Risk of Unpaid Bills
As the landlord, you’ll be responsible for paying the utilities directly, which eliminates the risk of unpaid bills. This can save you from the stress of chasing up late payments or dealing with disputes over utility accounts when tenants leave. You also avoid the hassle of transferring utility accounts and checking meter readings at the end of each tenancy.
The Cons of Including Bills in Rent
1. Potentially Lower Income
Utility costs fluctuate, and energy prices have been particularly volatile in recent times. During colder months, heating bills can spike, which might eat into your profits if your rent is set at a fixed rate. Even if the cost of utilities rises, it doesn’t necessarily mean you can pass that increase on to tenants, as there are often rules around charging for utilities in an all-inclusive rent setup. This means you could end up absorbing unexpected costs.
2. Increased Responsibility
Managing bills for a property that you don’t live in comes with added complexity. As a landlord, you’ll need to stay on top of finding competitive rates for utilities, switching suppliers if needed, and ensuring the property has reliable broadband. Additionally, if there’s an issue, such as a power cut or water outage, you’ll be the one responsible for contacting the utility providers, since you hold the account in your name.
3. Liability for Bills if Rent is Unpaid
If a tenant fails to pay rent, you’ll not only miss out on that income but also still have to cover the utility bills. While your tenancy agreement may offer legal protection, the immediate financial hit will come out of your pocket. This is a key risk to consider, as it can impact your cash flow in the short term.
What Bills Do You Pay When You Rent?
If you’re renting a property without bills included, you’ll typically be responsible for covering utilities like electricity, gas, water, and broadband. Tenants may also need to pay for council tax, TV licenses, and other amenities such as parking permits. On the other hand, an all-inclusive rental usually covers most of these expenses, allowing tenants to simplify their outgoings into one payment.
For landlords, the decision to offer “bills included” will largely depend on your target market and the level of involvement you want in managing the property’s running costs. It can be a strong selling point for attracting specific tenants, but it’s important to weigh up the additional responsibilities and financial risks that come with it.
Final Thoughts
Deciding whether to include bills in your rent requires a careful consideration of your property type, the tenants you want to attract, and your financial flexibility. As mortgage brokers in Leicester, we understand the financial pressures landlords face, from managing properties to navigating mortgage options. If you’re considering refinancing or need advice on financing your rental portfolio, feel free to reach out to us on our mortgage broker in Leicester page for tailored advice.