Tenants shun bills-included rented homes

Landlords offering properties with bills included can command a hefty premium for doing so – but tenant demand is surprisingly scarce for these rental homes, research reveals.

The study from estate and letting agents Benham and Reeves examined active rental listings and found that monthly rent for a property in England covering all bills stands at £2,028.

That compares with £1,682 for tenancies without bills included – that’s an extra £346 per month or 20.6% increase for landlords who take on utility responsibilities.

Despite the financial incentive, only 16% of rental properties currently advertised across England include bills.

Predictable tenant outgoings

Marc von Grundherr, a director of Benham and Reeves, said: “Offering your properties with bills included is unusual, especially outside of the student lettings market.

“While it may seem like the best way to offer tenants ease, efficiency and predictable monthly outgoings, the erratic nature of energy prices, and even council tax, can result in a landlord losing money despite the 20% rent premium that they can charge when bills are included.”

He added: “Tenants themselves don’t seem particularly drawn towards bills-included properties.

“This is likely to be a result of wanting more control and transparency over their household expenses.

“For example, they may want to be able to select their own suppliers and manage their own usage in order to minimise costs, and when they’re on an all-inclusive deal, this can’t be done nearly as easily.”

London has the lowest offering

The research found that the West Midlands leads with the highest proportion of bills included homes at 34.1% of listings, followed by Yorkshire and Humber at 22.5% and the North West at 21.9%.

In contrast, London shows the lowest rate, with just 9.3% of properties featuring this option.

The findings also highlight why so few landlords offer bills included and apparently landlords are deterred by administrative challenge it poses.

Managing utility payments for multiple properties can be both time-consuming and complicated.

Also, landlords face risks from fluctuating costs, such as energy prices, which have seen dramatic spikes in recent years.

Bills-included saves money

An analysis of household expenses reveals that the average monthly outlay for energy, broadband, council tax and TV licence totals £384.

That’s more than the £346 bills-included premium.

However, tenant interest in bills-included rentals appears equally subdued.

Only 13.3% of such listings in England have secured tenants, well below the national rental demand average of 28.2%.

The South East exhibits the strongest regional appetite at 21.9%, with the East of England, West Midlands, South West and East Midlands following.

Landlords in Yorkshire and Humber report the weakest interest, with just 6.4% of these properties let.