Posted in Blog  
  on Jul 28, 2015

What Utilities Should You Include?

Many new landlords and property managers don't know what utilities to include in rent, much less the thornier issue of how much to charge. There's no right answer, but read on to learn what you should take into account as you weigh your options.

The Argument for Including Utilities with Rent
You're likely to get more interest in a property if you include utilities. Many tenants believe that it's less expensive to them when utilities are included in a lease, making it more attractive and giving you a broader range of applicants from which to choose. Also, note that tenants often perceive included utilities as a bonus, even if it may be more expensive.

Why do some landlords not include utilities with rent?
Including utilities can be a headache. If you're having trouble staying on top of paperwork, your tenants might suddenly call angry about why the power's cut off. (If paperwork is getting to be a problem, consider using a recordkeeping program or spreadsheet to stay on top of it.)
Naturally, a higher utility fee will raise the rent, and if the property is already pricey this may break the bank for a lot of tenants. For that reason, you'll often see landlords not including utilities on higher-end properties.

Which utilities should you include?
If landlords choose to cover utilities, they'll usually pick basic utilities that have predictable costs, like gas or trash pick-up. Covering water bills offers a bonus for a landlord; if there's a leak on the property, it might show up on the bill, whereas a new tenant looking at the same bill might not notice. Covering electricity is more rare. Since electricity is metered, many tenants won't be incentivized to use electricity wisely, particularly during the summer months in properties with air conditioning. Most landlords don't cover internet or cable, except for properties that cater to younger tenants.

Fixed or Variable? And How Much?
One of the biggest determinants of whether you should go for a fixed or variable utility fee is how much you're willing or able to communicate with your tenants. Choosing a variable fee means you need to let your tenants know how much to pay each month. If you don't have the time or energy to put into that kind of regular contact, consider using a fixed rate. Additionally, some landlords choose to pay for only part of utility bills, leaving the rest to the tenants.
As mentioned above, many landlords add a little extra to a fixed utility fee, to cover the convenience of them handling the bills for the tenant. Different jurisdictions have different laws about how much can be added to these bills, so check before you do this to see if this is allowed, and have much. To prevent fraud, most jurisdictions request that you hold onto utility bills for a certain amount of time and disclose them to the tenant when requested, or that you even send a copy of the bill to the tenant each month. If you do decide to add on a little extra to the utility bills as a courtesy fee, make sure you don't push the rent too high this way, so as to not scare off future tenants.

Unfortunately, there's no easy answer to a lot of these questions. What you decide will depend on a lot of factors, including how much you're charging for a given property, how much time and resources you have at your disposal to deal with paying utilities, average utility costs in your area, and so forth. Weigh all these considerations carefully, and you should be able to come to a decision that's amenable to you and your tenants. Remember that no matter what you choose to do, you should explain your policy on utilities clearly in the lease, to avoid future disputes.


The Landlord Tenant Board: What it is and When it is Needed

Many times, there are issues between a landlord and a tenant that need to be resolved but are failed to do so, because both parties have gone too far with their actions, and have retaliated in the... More

How to Create a Residential Lease Agreement

Where there is a landlord, there will also be a tenant, and it is no surprise that these two parties can only work together once there is some sort of agreement, contract or a binding deal in place.... More

The Best Sites for Rental and Lease Agreement Templates

Many landlords find it difficult to write and draft a lease agreement. Since every State has its own general template, it can also be difficult to make sure your lease agreement meets all the criteria... More

5 Landlord Forms that Every Landlord Should Have

When it comes to being a landlord, one should know that it is not for the unprepared individual. This should be clear that being a landlord does not simply mean that you will be taking the rent and... More

Landlord Obligations: The Responsibilities of a Landlord

Becoming a landlord is a major deal and no one can simply get up and think, “well, yes I think I should be a landlord and rent out my flat.” If you are thinking that you would like to be a landlord,... More

The Best Landlord Associations for Landlords to Join

If you’re a landlord and want to manage your business in a better way, you should endeavor to get in touch with those industry experts who have the experience and the skills to help you do it. This is... More

The Best Landlord Forums

Landlords and aspiring landlords, do not become as such, without guidance and advice. There is a lot that goes into being a landlord nowadays; in fact, there is so much to learn that it often confuses... More

The Biggest Landlord Problems and How to Fix Them

Renting out an apartment or a house can become a constant revenue source for landlords, but at the same time, it gives rise to several problems. It is a fact that high standards, a strict lease... More

Landlord Tenant Disputes

If you are currently thinking of becoming a landlord only because it helps you have a constant stream of income, you should think twice. It’s not that you should not consider offering your property... More

Unpaid Rent

When you talk about the most common disputes arising between landlords and tenants, nonpayment of rent has to be there in the list. People rent their properties to earn money, and when a tenant... More