As the cost of energy spikes and the government rolls out new support, landlords and tenants involved in ‘bills included’ rental contracts will be grappling with a new host of challenges.
Rik Smith, Head of Tenancy Services at Goodlord, outlines three things landlords, agents, and tenants should know.
Landlords must avoid confusion on government’s £400 rebate
As recently announced by the former Chancellor, households across the country can expect a £400 grant this autumn to help them cope with rising energy bills, with further assistance available for the most vulnerable. But when it comes to rental properties, the £400 rebate will go directly to the bill-payer - which is the landlord in instances where tenants have the cost of utilities rolled into their monthly rental fee.
Most landlords will, quite rightly, retain the payment to offset the rising costs of the utility bills they are paying on behalf of their tenants. However, some tenants may have misunderstood the government’s offering and might be expecting this rebate to be passed on to them, even if they don’t pay energy bills directly. Agents and landlords should therefore communicate their plans (and the rationale behind them) well in advance to ensure tenants are clear on the next steps.
Agents and landlords may need to increase clarity around costs
The National Trading Standards (NTS) has announced changes to rules around the material information letting and estate agents should include in listings through property portals and their own sites - this kicked in during May 2022. Currently this means that tenants must be provided with clear information on their "unavoidable costs" of renting the property - such as council tax bands, price of rent, and deposits that may need to be paid. As these new rules are expanded, the regulations will also soon cover extra areas such as utility set-ups or information around flood risk status.
As a result, landlords offering ‘bills included’ tenancies will need to be explicit about costs and any variables to prices that might be involved during the contract - all this information will need to be provided to the tenant clearly and upfront by agents, rather than on request.
Now could be the perfect time to invest in energy efficiency
By 2025, private sector landlords will have to ensure their rental properties meet energy efficiency C rating or above on new tenancies. The UK is also set to ban gas boilers in new build properties from the same year. In short, all signs point to increased requirements on landlords to boost the efficiency of their portfolios. Arguably, with the lettings market buoyant and demand for rental properties at record levels, now could be the perfect time to invest in existing stock ahead of additional regulatory changes. Likewise, more energy efficient housing stock would reduce the overheads for landlords who are offering tenancies with bills included.
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