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Including Utilities in Rent: Pros and Cons

Marble Team Author Image
Written by
Marble Team
November 21, 2022

Common utilities

The most typical utilities cover everything your tenant requires to maintain a cozy home. Here are some of the utilities you will need to consider for your tenants if you decide to incorporate them into their rent:

Why Utilities Should Be Included in Rent

Convenience

It's a smoother process for you and the tenant if the utilities are set up and automated. Incorporating utilities simplify the move-in and move-out process if you have rental properties with month-to-month lease agreements. The owner no longer needs to worry about forwarding the bills to the tenant every month.

Gains from taxes

You can deduct any utility costs you incur for the rented property. Although many landlords provide trash service, you can write off whatever utilities you use, such as gas, water, and electricity.

Flat rate shared utilities

A lot of older apartment buildings don’t have individual meters for each unit. A sizable house divided into a few apartments also fits this description. When this happens, it might be more cost-effective to include flat rate utilities in the rent rather than to think about adding meters.

Renters of more outstanding quality

Incorporating utility costs can draw in better-qualified tenants who are more responsible and value having a single, easy-to-manage bill each month for peace of mind. As a result of their desire for an uncomplicated, stress-free lifestyle, tenants who are willing to pay a higher rent in exchange for utility inclusion are frequently simpler to manage. There are no longer “two bills” to pay, and everything is consolidated. 

Why Utilities Shouldn't Be Included in Rent

Responsibility for your tenant's utility

It could be a test of the quality of the tenant if you require them to register for the local utility company themselves. That way, the utility company will pursue them if they fail to pay them on time. There is more of a sense of responsibility for the tenant to ensure their lights and water stay on. 

A higher rent may deter some potential tenants.

Yes, it may be handy for tenants if utilities are included in the rent. However, this portends a higher overall rent payment in a weak market, which might be detrimental. It pays to research beforehand what the average utility usage and cost is in your local area. Some market circumstances may be favorable, while others may not.

So, should utilities be included in the rent or not? There isn't a straightforward solution to that. You must assess your own choice to determine what is the best fit for you and your business model.

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