Pros and Cons of Utility-included Rental Agreements

Renting and Utilities

The case for a landlord or their tenant being responsible for the payment of utilities; it’s an issue that can rear its head at any time in relation to residential property management. Looking at it from the point of view of a landlord, one of their financial goals in leasing out a property is to maximize cash flow. Therefore, as there are positive and negative factors involved, the different options must be seriously considered before a formal agreement is completed.

By including utilities in the monthly rate; within the sphere of the property management, it could prevent a variety of potentially conflicting situations or interactions with a tenant. In the first instance, it helps efficient rental payment collection with a single transaction, as well as preventing friction if a tenant disagrees with the charges on their utility bill.

Furthermore, the inclusion utility cost in the rent can make for a mutually more effective and organized tenancy. This in turn can result in an amenable relationship between landlord and tenant to the improvement of the property and its environment. In other words, it could be regarded as positive and sound residential property management. Additionally the utility cost forms part of rent under the Act, so it provides for more protection to a Landlord.

Mutual preferences and differences

Including the utility charges in the rental payments can also be beneficial and attractive to tenants, both existing and potential. As far as the property management is concerned, the tenant will not have the concerns and responsibilities associated with making utility payments and managing them personally. It’s a simple and convenient progression that offers a hassle-free solution in residential property management to those landlords and tenants who are seeking an organized and easy payment method.

Looking at the other side of the coin is the question of minimizing the financial responsibility and liability for the landlord. If the property management includes utility billing being sent directly to a tenant, responsibility for collecting payments or managing the utility account is removed from the landlord.  It is one that could be welcomed by some landlords who prefer not to have this added responsibility.

Residential property management does not always go to plan and if, for any reason, a landlord does not make utility payments on time for the services provided, electricity and hot water for example, could be suspended. The result of this action would undoubtedly negatively affect the living conditions and lifestyle of the tenant(s) as well as posing a risk element to the overall business stability of the landlord!