The pros and cons of bills-inclusive tenancy agreements

The pros and cons of bills-inclusive tenancy agreements

As a landlord, finding new ways to engage potential tenants and stand out in a crowded rental market can be tough. One way an increasing number of landlords are diversifying their offerings - particularly in the student rental market - is to offer an all-inclusive service, where tenants pay one monthly fee for their rent and household bills. One fee can cover everything from gas and electricity to council tax, broadband and water, and it can be an attractive proposition when marketed correctly. Below, we’ve rounded up the biggest pros and cons… 

PRO: Makes your properties more desirable

Perhaps the most obvious benefit of offering an all-inclusive service to your tenants is that your properties and service will instantly become more attractive. Modern consumers are increasingly looking towards time-saving and money-saving options, particularly when renting. Bundling everything into one attractive package can help you appeal to more tenants and ensure your properties are filled. However, you must market the service properly to ensure your properties don’t look expensive when compared to those rented without bills.

CON: Adds to your responsibilities

One disadvantage of offering a bills-inclusive service is that you’ll have more responsibilities as a landlord. As well as finding tenants, you’ll need to manage utilities on a monthly basis, and think about switching from one supplier to another to save money. The good news is that companies like Billing Better can do this for you (find out more about our bills inclusive service for landlords and letting agents), and we’ll automatically keep you on the best prices.

PRO: Attract millennial and Gen Z tenants

If you live in a city with a high student population, the chances are that you’re always fending off competition from student halls and large luxury apartment blocks. Repositioning HMOs to become all-inclusive properties for students or young professionals is a great way to attract the right tenants and earn more money, and once you’ve developed a reputation locally, you should find it easy to rent your property year in, year out. Ask for reviews from your satisfied student tenants on Facebook and Google to help spread the word and build your brand.

CON: Rises in utility bills can impact profits

One drawback of offering an all-inclusive package is that bills can fluctuate month to month, which is why we recommend pricing your offering to include a “buffer” or passing on those changes to your tenants month-to-month. That way, if they’ve had a particularly busy month using lots of gas and electricity, it’ll reflect in their bills, rather than eating into your pockets.

PRO: Prevents unpaid bills and council tax

As a landlord, offering a bills-inclusive package means that you’ll never have to worry about unpaid invoices and bills again. The last thing you want to happen is to inspect your property ready for the next tenant, only to realise that they’ve defaulted on their water bill or haven’t paid their council tax. Controlling the bills from your end offers you greater peace of mind.

CON: You’re liable for bills when tenants don’t pay

Finally, consider that you’ll be liable for bills when tenants don’t pay, or your property is empty for an extended period. You can combat the former by updating your tenancy agreement to protect yourself against unpaid bills, and the latter will incentivise you to find your next tenants quickly. And thanks to usage monitoring, you’ll know exactly how much gas, electricity, and other utilities your tenants have used before moving out, meaning you can bill them accordingly to ensure you’re operating fairly, taking away any “bills ambiguity”.

If you’re interested in offering a “bills included” service to your tenants, click here to find out more about Billing Better and arrange a demo with a member of our team today. For more advice on running a successful buy-to-let business, check back to our blog every month.