Your guide to 'bills included' tenancies

2 September 2022

Energy prices are soaring - and so are searches for tenancies with bills included. So what does your agency need to know about allowing your tenants to pay for their bills and rent, all in one lump sum?

The term "bills included" has surpassed searches for "garden" and "pets" to become the most popular property feature searched for by renters, according to recent data. This is unsurprising, as tenants are starting to look for more certainty in their monthly outgoings, to help them budget while day-to-day costs are soaring.

However, this coincides with a dip in landlords offering tenancies inclusive of bills, with 90% fewer listings in July 2022 versus January 2022, according to Vouch data. So, what does this mean for the future of "bills included" tenancies?

What is a "bills included" tenancy?

This is a tenancy agreement where some of a tenant's bills - often a combination of energy, council, TV licence, and broadband - are included in their monthly rental payments.

The landlord or letting agent then shoulders the responsibility of paying for the bills each month on the tenant's behalf.

How to tenants benefit by paying for bills and rent in one lump sum?

Tenancies with bills included offer tenants an easier way to budget and help them avoid the hassle of arguing over who pays what when in a shared property.

What are the benefits for your agency and landlords?

In the current circumstances, with the energy crisis and the increased cost of living, tenants may be willing to pay more for their bills to be added to their rent payments each month.

If you are managing the bills, the risk of the energy being cut off or issues with the council will also be reduced.

Should your landlords offer tenancies inclusive of bills?

Any of your landlords that currently offer bills included but have not yet fixed their properties' energy prices may find that their gas and electricity costs are rising, yet they may not be able to increase the rent to cover this increase.

You can help your landlords ensure they're appropriately balancing the costs that they're expected to pay with the money that they earn.

There are providers out there who will fix the price for electricity - although those are now few and far between - and that means your landlords can capture this segment of tenants that are willing to pay more with one, packaged payment to ensure they have some certainty in their monthly outgoings.

What else should you consider when offering bills included in your landlords' tenancies?

Offering to pay your tenants' bills comes with extra administrative responsibilities. You'll need to keep on track of each bill payment, so your agency will need to factor this into your fees if you plan to manage this on behalf of your landlords.

Alternatively, some utility providers may be able to undertake the switching and payment process for you.

Should you partner with a bills inclusive provider to offer your tenants a packaged option?

Agents or landlords could choose to partner with a provider that offers bills inclusive packages to renters, to bundle multiple suppliers into a single payment.

This takes the admin off your agency's plate, yet still gives your tenants a smooth experience and more certainty on how much they'll be paying each month - a win-win for everyone.

Should landlords offering "bills included" tenancies pass on the £400 Energy Bills Support grant?

There have been calls for landlords to pass on the £400 energy bills grant to their tenants.

The government guidance states that landlords that have a domestic electricity contract through an electricity supplier and that re-sell this electricity to their tenants based on their energy use "must comply with the maximum resale price rules".

This means that they can't make a profit on the resale, they must sell it at the rate that they paid initially.

However, a spokesperson from the National Residential Landlords Association (NRLA) says: "The government needs to ensure that its scheme recognises such cases where it is the landlord who is ultimately paying the cost of increased bills, rather than the tenant."

However your agency decides to handle this £400 energy grant, you will need to communicate this clearly to your tenants, so they understand the reasoning if your landlord retains the payment.

Want the latest lettings new delivered straight to your inbox every week? Sign up to our mailing list and stay up to date.

Further reading