All-Inclusive Vs Non-Inclusive Renting Options: Advice For Landlords
For many landlords, deciding whether to offer tenants an all-inclusive or non-inclusive rental agreement can be challenging – each arrangement has its benefits and its drawbacks. To make your decision easier, we’ve narrowed down the pros and cons of each rental option.
Before we get into the pros and cons list, let’s begin by ensuring we know the difference between all-inclusive and non-inclusive renting options.
What is an inclusive renting agreement?
An inclusive rental agreement is one in which the money your tenants pay you each month covers their household bills and the cost of renting your property.
As a landlord, you have the right to decide which bills are included in this agreement.
However, heating, electricity, broadband, TV licence, water bills and council tax are generally part of an all-inclusive rental agreement.
What is a non-inclusive renting agreement?
A non-inclusive tenancy agreement is one in which you, as a landlord, are not responsible for paying your property’s bills.
Instead, it’s up to your tenants to arrange their utility providers and to pay bills, such as electricity, heating, broadband, and council tax.
In a non-inclusive rental agreement, you’ll only charge your tenants for their monthly rent and no extra costs towards bills.
What are the pros and cons of an all-inclusive rent agreement?
As a landlord, offering your tenants,’ an all-inclusive rent agreement comes with pros and cons.
Understanding these can help you decide whether this is the right rental arrangement for you.
What are the pros of an all-inclusive rent agreement?
The biggest pros of an all-inclusive rental agreement include the following:
1. Properties are more attractive to a broader range of tenants
Many renters like the hassle-free experience offered with all-inclusive rental agreements. They don’t have to go to the trouble of researching utility providers for the best prices.
An inclusive rental agreement makes your property attractive to many property seekers. This way, you’ll have a large pool of tenants to choose from, making it easier to find the one that’s right for you.
2. No nasty surprises
With an inclusive rental agreement, you’ll never have the stress of finding out your tenants haven’t been paying their bills.
Imagine your tenants move out only for you to find out they’ve left behind a water bill or haven’t paid their council tax. It’ll be up to you to pay these arrears before a new renter moves in.
With an all-inclusive rental agreement, you can save yourself any nasty shocks and have the peace of mind that your tenants are paying what they owe on rent and bills.
What are the cons of an all-inclusive rent agreement?
Along with appealing benefits, all-inclusive rental agreements have cons that may be off putting for some landlords.
1. Greater responsibility
Finding suitable tenants that will respect your property and pay their rent on time is a big responsibility.
But when you opt for an all-inclusive rent arrangement, you’ll have the added pressure of managing utilities every month.
You’ll also likely have to regularly switch from one supplier to another to save money, which can be time-consuming and tedious.
2. Risk of tenants overusing energy
With an all-inclusive arrangement, you run the risk of tenants overusing their energy, so their monthly rent fees won’t cover it.
This can lead to difficult conversations over what’s acceptable and not acceptable to use.
Pros and cons of a non-inclusive rent agreement
Like all-inclusive rent arrangements, non-inclusive agreements have their share of pros and cons.
What are the pros of a non-inclusive rent agreement?
The biggest benefits of non-inclusive tenancy agreements are as follows:
1. Fewer responsibilities
One of the biggest benefits of a non-inclusive tenancy is that, as a landlord, you have fewer responsibilities.
Without arranging utilities and calculating the total cost of bills to be added to the rent, there is much less for you to worry about.
2. Ideal for managing multiple properties
For busy landlords managing multiple properties, non-inclusive rental contracts save valuable time.
You can free up time for other management tasks without the hassle of collecting payments and managing services on a tenant’s behalf.
What are the cons of a non-inclusive rent agreement
But non-inclusive arrangements are not all plain sailing and have their cons for landlords to contend with.
1. Unattractive to younger tenants
Students, Millennials, and Gen Zers tend not to like non-inclusive tenancies, as splitting bills among roommates becomes complicated.
If you live in a city with a high student population, you may be fending off competition from student halls and apartment blocks. An all-inclusive rental arrangement would make it easier to compete.
2. Unpaid bills can cause issues
Even though it’s the responsibility of your tenants to pay their bills, the backlash will fall on your shoulders if they fall into arrears.
Failure to pay council tax can be a big issue, and if utility bills are outstanding, then the energy supplier could cut off the service entirely.
We hope this blog has given you a clear understanding of the differences between all-inclusive and non-inclusive renting options and the pros and cons of each.
Deciding which option is right for you can be challenging when you have many other landlord duties.
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