When it comes to utility costs in rental properties, there are several arrangements landlords and tenants can make. The tenant can pay for all utilities, the landlord can pay for all utilities, or the landlord can pay for some utilities, such as trash, while the tenant pays for the rest. If landlords decide to pay for utilities, they typically calculate the average monthly cost for the unit and bundle that into the rent. This means determining utility costs is an essential part of calculating what to charge for monthly rent. The most common utilities that tenants need to run a comfortable home include water and sewer, electricity, gas, trash and recycling. Internet, cable and phone are also considered utilities but are usually the tenant’s responsibility, even in properties where utilities are included. Including utilities in the rent has several advantages, including simplicity and a more streamlined move-in/move-out process. It can also attract higher-quality tenants who appreciate having just one monthly bill to worry about and are willing to pay more for that convenience. Landlords can also benefit from tax deductions for the utilities they pay for. Additionally, when utilities are included in the rent, there is less room for arguments between roommates over who owes what and who pays what bills. However, there are also some downsides to including utilities in the rent. Rates can change, which means landlords may need to increase the rent to offset rate hikes. It can also be harder to consistently and accurately determine profits from the investment property due to fluctuating utility costs. Landlords are also liable for each utility company, regardless of whether or not their tenant pays on time. Finally, when tenants don’t have to pay for utilities, they may be less incentivized to conserve energy, resulting in higher utility bills. To combat some of these downsides, landlords can set a cap on what dollar amount inclusive utilities cover to help curb excessive use and incentivize tenants to use utilities thoughtfully. Additionally, including utilities in the rent is not permitted for rent-controlled properties. Overall, including utilities in the rent can have both advantages and disadvantages. Landlords should carefully consider these pros and cons before making a decision, and tenants should be aware of what is included in their rent and what they are responsible for paying.
TheSFPropertyManagement is a full-service property management company that specializes in residential single-family and multi-family properties in the San Francisco Bay Area. If you are a tenant searching for an apartment, please contact TheSFPropertyManagement today at 415-712-0507 to discover the available options that best suit your needs. Similarly, if you are a homeowner seeking a property management company to take care of your property, kindly contact us for assistance.
