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As a landlord, offering all-inclusive rent can make your property more attractive than other rentals in the same area. But what does all-inclusive rent actually mean? And how can you make it work to your advantage? 

This guide will walk you through the bills inclusive rent concept, explore its benefits for both tenants and landlords, and highlight some legal and contractual considerations. Whether you’re new to the idea or looking to fine-tune your all-inclusive rent strategy, this article should offer some tips and tricks to help grow your property investment. 

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What is all-inclusive rent 

All-inclusive rent involves bundling all costs into one monthly payment to the landlord. Rather than just paying the rent due on a certain date every month, the monthly payment will also include specific items such as gas bills, water bills and broadband bills. 

Unlike traditional leases where tenants handle these costs independently, rent inclusive of bills offers a single, predictable payment for the tenant. Opting for an all-inclusive rent option often simplifies the situation for tenants, but it can require careful planning for the landlord to ensure everything is profitable.

What are the benefits of all-inclusive rent for landlords 

All-inclusive rent options are popular amongst student lets and HMOs (House in multiple occupation). This is because it makes it easier for students to budget when it is likely to be their first time living independently from their own families. There is often a high turnover for student lets, meaning it saves changing the name of the bills and accounts every 1-2 years. 

There’s also the bonus of not having the hassle of splitting the bills between the tenants living in the same property. This can be quite confusing and can create a point of contention between tenants and damage the tenant-landlord relationship. It could also increase rent premiums. Tenants who enjoy this hassle-free set-up are perhaps more likely to extend their stay. 

There are also benefits for the tenant. With rent inclusive of bills, they get cost consistency. For example, they avoid the shock of a sudden spike in heating costs during a cold winter. It’s a stress-free way to rent, as they have fewer things to worry about as the tenancy starts, during, and as the tenancy ends.

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Legal and contractual considerations

Despite being a seemingly simple prospect, there are still some legal and contractual considerations when making rent inclusive of bills. The tenancy agreement must explain what all-inclusive rent means in your specific situation. It must detail exactly what bills the landlord will pay and whether this includes council tax and broadband.

Tenants should understand whether you’re basing the rent on historical utility averages or building a buffer for fluctuations. Utility prices and council tax rates aren’t static, so landlords will benefit if they include a clause allowing periodic rent reviews to adjust for changes. Make sure tenants know how and when they’ll be notified of any increases.

When making your self-assessment for tax purposes, you will need to include the entire income. Rent inclusive of bills counts as rental income, but you may need to break it down for reporting purposes. For instance, separating base rent from utility contributions could affect what expenses you can claim. Speak with an accountant to stay compliant.

Practical tips on pricing

Setting a price for your all-inclusive rent might be quite a challenge. Landlords will want to make their overall pricing attractive to prospective tenants and remain competitive whilst protecting their own bottom line. Researching the local market is the first step, followed by researching historic bills at the property. It’s also worth bearing in mind seasonality. Heating costs are obviously going to be more expensive in the winter months.

The data collected will allow landlords to gauge average monthly expenses to calculate the bills inclusive rent price. They should factor in council tax and broadband and add a cushion of around 10% to cover unexpected hikes or overuse. A small premium of 5% is often added to account for management efforts and boosting profitability.

Landlords could also be flexible and offer a hybrid method where rent is inclusive of certain bills. Perhaps utilities like gas, water and electricity are included, but broadband deals aren’t. This caters to different budgets while maximising a landlord’s income potential. 

Keep an eye on actual costs over time, too. If you’re consistently over- or under-charging, adjust the rent during the tenancy renewal to stay competitive and profitable.

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Practical tips on managing all-inclusive rent

Making rent inclusive of bills could be quite daunting to landlords, given they have no control over how much water, electricity and gas tenants use. Even if it’s indirect, landlords can have some sort of control with careful planning. This includes focusing on energy-efficient properties if you have yet to make a purchase or are looking at making your property more energy efficient.

Good insulation, modern heating, and efficient appliances help keep utility costs predictable, protecting your profit margins when using a bills-inclusive rent strategy. If you manage multiple properties, it might be worth inquiring about bulk deals with your providers.

It’s also worth speaking with your tenants to encourage responsible usage. This could include simple guidelines such as limited heating hours and reminders about turning lights off. You could add timers in the property, meaning there is an automatic shutoff after a certain period. 

A bills-inclusive rent arrangement needs to be transparent throughout. The tenancy agreement and welcome pack must clearly break down what is included so there is no confusion. Communication then needs to continue throughout the tenancy in case there are any changes to bills. If a dispute arises, be ready to share your documents and bills with the tenant as proof. 

While it’s not a legal requirement, opting for landlord insurance is a smart move to safeguard your rental property and investment. The right policy can offer peace of mind, especially when navigating the ins and outs of all-inclusive rent. Securing proper insurance is an essential step. To explore landlord insurance options, give us a call at 01788 818 670 for more details, or get a quote online today.

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