Handling utility bills as a landlord | Best Practices
One of the concerns frequently raised by first-time landlords is the issue of utility bills. Read our guide on how to handle utility bills as a landlord. Each landlord and letting agent has their own approach to handling utility bills. This is usually dependent on the type of tenancy agreement they are offering, the length of the tenancy, and the types of tenants they are dealing with.
Whichever method you choose, it’s important to get it right. Unpaid utility bills can present real difficulties, which you, as the rental property owner, may ultimately be responsible for. You may be able to recoup some of this from the deposit, but unpaid bills can soon mount up to substantial amounts.
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Read what your responsibilities are in relation to bills when a tenant moves in.
Find out the benefits of a bills inclusive agreement and whether it may be suitable for you.
Find out whether a tenant has the rights to change utility supplier.
Read who should be responsible for paying bills in a multiple-occupancy property.
Find out what your responsibilities are with bills at the end of a tenancy.
We answer frequently asked questions on handling utility bills.
Find out how a bill splitting service can make life easier for you and your tenants.
What to do when a new tenant moves in
When a new tenant moves into your property, you should immediately inform the local authority. They will then bill the new tenant for council tax. At the same time, you should also contact utility suppliers, and let them know about the change of tenant.
Your tenant’s responsibility for the utility payments should be made clear to them, not only in the rental agreement but also in writing elsewhere. Provide the contact details for the current utility suppliers, and perhaps encourage the tenants to take out monthly direct debits to handle the payments.
Make sure you keep your copy of the tenancy agreement safe. It will be your ultimate backstop should your tenants fail to honour their commitment to pay bills.
Meter readings should also be taken at the beginning of the tenancy and readings provided to the utility companies, the tenant and kept with your copy of the tenancy agreement.
You can read our full guide to landlord’s responsibilities here.
Should I offer a bills inclusive agreement?
One of the easiest ways to remove any doubt about utility bills is to offer a bills inclusive tenancy agreement. This means that responsibility for paying the bills remains with the landlord, but that the rent received covers the cost of all of these bills. You have the peace of mind that the property bills are being paid.
These are particularly popular with landlords who let to students, or other young people, multiple occupancy properties, or in tenancies of short duration. Ultimately, it’s up to the individual landlord which bills you include, but typically this might be:
- Electricity bill
- Water bill
- TV licence
You can read our guide to the landlord’s responsibilities regarding water bills here.
You may want to offer a combination of a number of the above. Keeping up to date with all of these payments can be time-consuming, particularly if you have a number of properties. The easiest way to handle these bills is by using a service such as Split the Bills
. A bill splitting service can help you manage bills with one easy monthly payment. We will provide you with one monthly itemised bill to clearly manage your utilities. You can read more about this service here
For more advice on making a decision, read our guide to offering an inclusive vs non-inclusive agreement
Can a tenant change utility provider?
If your tenant is handling their utility bills themselves, then they have the same rights as property owners to shop around for the most competitive energy supplier. To avoid confusion, should make it clear that should your tenants wish to do this, they should inform you.
Who is responsible for bills in a multi-occupancy property?
Whoever’s name is on the bills for a multi-occupancy property is ultimately responsible for ensuring they are paid. This might be a tenant, or it could be the landlord if they are offering a bills inclusive tenancy agreement. Disputes often arise in multi-occupancy properties between tenants as to how bills are divided. If your tenants are responsible for paying the bills, suggest a simplified bill payment service to help reduce the risk of disputes occurring. You can read more about our referral service here
What to do at the end of a tenancy
As at the beginning of a tenancy, this is a key moment when it comes to utility bills. If the tenant has been responsible for paying the bills, then the utility companies need a few days notice before the end of the tenancy. It’s the responsibility of the tenant to inform them. Tenants may also be required to take a meter reading at the end of the tenancy, and it is prudent for the landlord to take their own.
Frequently asked questions – handling utility bills
What should you do if your tenant leaves and owes on utility bills?
If a tenant leaves and is in arrears on their utility bills, the landlord is not responsible as long as you can provide proof that the tenant was responsible. Should the utility companies approach you about these arrears, you should provide up to date contact details for the tenant. You will only be responsible for any costs incurred from the end of the tenancy, and for void periods.
Landlord and tenant disputes are common when it comes to utility bills. Read our guide to dealing with landlord and tenant disputes here
Are landlords responsible for council tax?
Responsibility for council tax is dependent on who is in the property, and whether or not it is occupied. Full-time students are exempt from paying council tax, so if your property is let to students, then there is no liability. You can read our full guide to renting to students here.
Ultimately, the person who lives in the property is liable for paying council tax. The landlord only becomes liable when the property is untenanted.
What do landlords usually pay for?
Landlords will typically pay for the maintenance and general upkeep of the property. Utility bills will ultimately be paid by the tenant, either directly or through a bills-inclusive rental payment.
What are the rules with a student house and utility bills?
Students are exempt from council tax bills, but otherwise would be expected to pay their utility bills like any other tenant. To keep things simple, many landlords prefer to offer bills-inclusive tenancy agreements for student lets.
You can read more about the rules on students and council tax here
What is a utility pass-through?
Pass-through costs are the charges that utility companies pay to other companies who help to maintain the network. These charges are approved each year by the utility regulator, and they are charged by every supplier. The basis on how they are charged should be included in your utility terms and conditions.
Can a lease be void if a certificate of occupancy is not present?
The relevant UK building regulations can be found at the Building Regulations Approval
. It’s important that you familiarise yourself with them before letting a property or undertaking any serious renovation work.
How often should I check the meter readings at my property?
If you as the landlord are paying the bills at the property, you will need to take regular meter readings. These will differ depending on the utility company and tariff you have chosen. You’ll also need to ensure that you take meter readings at the beginning and end of the tenancy. If your tenants are responsible for paying bills, then it may be prudent to take readings during property checks in case of future disputes.
What if my tenants have a disagreement about splitting bills?
Arguments over how bills are divided and paid are not uncommon in multi-occupancy properties, and you as the landlord may be called in to adjudicate.
A bill-splitting service can help make life easier for tenants and landlords alike
One way to reduce the potential for disagreement is to suggest that tenants use a bill splitting service such as Split The Bills
. It ensures that all tenants pay the same amount on the same day each month.
As a landlord, you can also use Split the Bills to offer all-inclusive tenancy agreements. These are particularly popular with students and other young people in multi-occupancy households. The Split the Bills service for landlords and agents
removes some of the potential headaches around utility bills, reducing the possibility of disagreement and bills being left unpaid.
The landlord’s responsibilities regarding water bills
Landlords and bills: a full guide
The landlord’s responsibilities for utility bills