Bills-included rentals low in both supply and demand

Research by London lettings and estate agent, Benham and Reeves, reveals that landlords who offer bills-included rental properties can charge a significant premium, so why are both supply and tenant demand for bills-included homes so low?

Benham and Reeves analysed live rental stock data* and found that the average asking rent for a bills-included property in England is £2,028 per month, while the average for a property without bills included is £1,682. This means landlords who offer bills-included rentals benefit from a rental premium of £346 per month, or 20.6%.

Despite this, very few landlords appear to be offering this option to tenants, as only 16% of all rental properties currently listed on the market in England are advertised as having bills included.

The West Midlands has the strongest stock level of bills included properties, accounting as they do for 34.1% of all current listings. This is followed by Yorkshire & Humber (22.5%) and the North West (21.9%). Meanwhile, in London, bills included account for just 9.3% of advertised stock.

Why are landlords reluctant to rent their properties with bills included?

One of the main reasons so few landlords offer bills included properties is because they are an administrative headache that most would rather do without. Taking on the burden of paying household bills across a rental portfolio can be a time consuming and complex process.

Furthermore, offering bills included over a 12-month tenancy exposes landlords to the significant risk of, for example, energy bill prices unexpectedly skyrocketing, as has been proven to happen numerous times over the past few years.

An analysis of household bills finds that the average monthly cost for energy, broadband, council tax, and TV license comes to £384. This is already higher than the average rental premium of £346, raising further questions about whether offering bills included rentals makes financial sense for landlords.

On top of all of this, further analysis from Benham and Reeves reveals that tenant appetite for bills included properties is low with just 13.3% of current listings in England having already found a tenant.

This is significantly lower than England’s overall rental demand figure of 28.2%.

Tenants in the South East are most likely to go for a bills-included rental, with regional demand sitting at a high point of 21.9%. This is followed by the East of England (18.5%), West Midlands (13.1%), South West (12.5%), and East Midlands (12.2%).

Demand is at its lowest in Yorkshire & Humber where just 6.4% of bills-included rentals have found tenants.

Director of Benham and Reeves, Marc von Grundherr, commented

“Offering your properties with bills included is unusual, especially outside of the student lettings market. While it may seem like the best way to offer tenants ease, efficiency and predictable monthly outgoings, the erratic nature of energy prices, and even council tax, can result in a landlord losing money despite the 20% rent premium that they can charge when bills are included.

Tenants themselves don’t seem particularly drawn towards bills-included properties. This is likely to be a result of wanting more control and transparency over their household expenses. For example, they may want to be able to select their own suppliers and manage their own usage in order to minimise costs, and when they’re on an all inclusive deal, this can’t be done nearly as easily.”