Demand for ‘bills included’ rental properties goes up in London

Demand for ‘bills included’ rental properties goes up in London

8:01 AM, 23rd September 2022, About 2 weeks ago 5

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Demand for rental homes across the capital with bills included within the cost of renting has climbed considerably since April, research reveals.

The findings from lettings and estate agent, Benham and Reeves, however, highlights that tenants are still paying a rental premium for the pleasure.

The firm analysed current rental stock available across London and found that currently, just 5% offer to cover the cost of bills within the monthly rent.

Availability is at its highest in Brent, where 12% of all current rental properties listed on the market include the cost of bills within the rent, followed by Hounslow and Barking and Dagenham (10%).

Cost of energy bills spiralling

With the cost of energy bills spiralling in recent months, it’s no surprise that demand for these rental homes is also high.

Benham and Reeves found that 34% of rental properties that include the cost of bills within the rent have already had a let agreed, up from just 26% in April of this year.

The agent was also keen to examine whether having the bills included in the rent is worth it for tenants.

They found that the average rent for a London rental where bills are included currently stands at £3,045 per month – that’s a 51% increase on the £2,023 being paid in April 2022.

Properties without the cost of bills covered

Rental properties without the cost of bills covered are understandably more affordable at £2,460 per month, although this cost is still up 43% since April 2022.

The average cost of monthly bills is now £321 across the capital, that’s up 34% since April alone.

Despite this increase, those paying their rent and bills separately are still only forking out £2,781 per month.

That’s £265 less a month than the average rent for a property with bills included, which is a difference of £3,175 per year.

Cost of paying bills and rent in one payment

What’s more, back in April, the cost of paying bills and rent in one payment was just £59 – or £711 per year – compared to those paying their rent and bills separately.

That’s an increase of £206 per month or £2,464 per year since April, for those opting for the convenience of a rental home with bills included.

Marc von Grundherr, a director of Benham and Reeves, said: “Many tenants prefer the convenience that comes with a rental property where all running costs are covered in one monthly payment along with their rent.

“Of course, this rental cost is going to be higher than a property where bills aren’t included, and landlords may well charge more as a contingency for a less stringent approach to managing the consumption of gas, electricity and water.”

‘Heightened level of convenience’

He added: “However, as our research shows, just a few short months ago it equated to an additional £59 per month which is a very manageable increase for such a heightened level of convenience.

“But since then, the cost-of-living crisis has spiralled out of control and the cost of running our home has been one of the driving factors behind this.

“Now the increase in asking rents for bills inclusive rental properties is huge, having increased by over £200 per month since April alone.”

Mr von Grundherr continued: “Of course, this isn’t down to savvy landlords trying to offset their own high energy costs, it’s simply the reality of the world we’re currently living in.

“However, it’s important for landlords to consider just how much they may be in line to pay should they find themselves with a tenant who plans to work from home this winter, as it could leave them out of pocket even when charging a rental premium to cover the increase in running costs.

“At the same time, any landlord who does opt to keep the bills in their name may also find themselves liable should their tenant fail to cover these costs.”



Comments

NewYorkie View Profile

10:55 AM, 23rd September 2022, About 2 weeks ago

What is the purpose of this article?

DSR

11:53 AM, 23rd September 2022, About 2 weeks ago

no LL in their right mind is going to offer up a rental with bills included when there is absolutely no understanding or certainty of what they could rise to today, tomorrow or next week never mind a within a min 6 months AST.

If they did - apart from being crazy - the risk would be so high, the rental cost would be terrific. No one would pay the rent and instead the LL would have to remarket as without bills just for tenants to be able to afford it.
A nothing article.

NewYorkie View Profile

15:58 PM, 23rd September 2022, About 2 weeks ago

Reply to the comment left by DSR at 23/09/2022 - 11:53
Demonstrates the naivety of some tenants. If they are lucky enough to have a bills-included rental, they should be very thankful. But I suspect they will all soon be hit with a significant increase with no-bills. If they don't like it, their options are extremely limited, everywhere. Renters need to accept times are tough, and getting tougher. They've had it good for many years, and it is a shock. But, that's life in the grown-ups world.

Personally, one more flat to sell, and I'm out of the PRS. Don't need the hassle.

DSR

16:25 PM, 23rd September 2022, About 2 weeks ago

Reply to the comment left by NewYorkie at 23/09/2022 - 15:58
i'm getting that way now. not always about the money - your own sanity comes first!

Spoke to two agents this week - four properties on now on the market. two properties have a combo of 9 tenants that an investor LL will wither carry on with, or if they want to raise the rent, probably give notice to - none of them can afford a increase. I've been too good and only raised it to what they can afford, not necessarily what the market dictates.

NewYorkie View Profile

16:27 PM, 23rd September 2022, About 2 weeks ago

Reply to the comment left by DSR at 23/09/2022 - 16:25
And there are calls for rent controls! As we can see in Dublin, that would only exacerbate the problem.

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