Removing all bills from rent seems like a bad idea for HMO landlords/operators and tenants. For HMO Landlords and HMO letting agents looking to advertise HMOs "All Bills Included" is a really attractive
feature for HMO Marketing.
Here is why:
Cons for landlords/operators:
- Your competitors will not be doing it. Ever.
- Admin burden of splitting bills per tenant
- Admin burden issuing invoices per tenant, every month
- How on earth do you enforce payment from them?!
- The risk of tenants not paying bills but paying rent, leaves little recourse
Cons for tenants:
- Less security due to fluctuating bills
- May cause arguments and disharmony in the house
- Virtually impossible to know what their personal usage is
- It is not plug and play, which is highly attractive
What are the solutions to rising bills and changing legislation - unfortunately, they are not simple.
- Install energy saving/water saving tech
- Raise the inclusive rents (only once a year)
- Remove “ALL BILLS INCLUDED” and replace with “BILLS INCLUDED”
- Take fair usage policy seriously
I asked Mary Latham for tips on how we (as landlords) can realistically enforce the last 2 points:
1. Be clear about the kWH and M3 of energy usage expected (based on last year's bills)
2. Include clauses banning charging scooters/cars/electric heaters
3. If exceeded, issue an invoice to tenants who have occupied rooms for 3 months or over. You should be prepared to refund if usage is lower
4. The Tenants Fees Act allows for this additional charge.
5. The landlord can decide payment must be made at that time or it can be taken from the tenant's deposit with their written consent at the end of the tenancy.
6. The default position is to subtract it from the deposit because it is a term in the signed contract as long as the tenant is being kept aware.
7. At viewing and in the contract, it must be clear that these fair usage clauses apply.
N.B. neither Mary Latham nor I, are qualified solicitors. We are not insured to give any legal advice so the notes above are just thoughts as colleagues and landlords - not as legal professionals.
I know this is not a perfect / easy / hassle free solution. I have been thinking about it for a while, but this is the best I can come up with. I am sure the hive HMO group mind could potentially come up with something better.
Any other things I've missed?
Let me know below.