What are Apartment Utilities?

Apartment utilities typically mean water, sewer, e

Apartment utilities typically mean water, sewer, electricity, and gas (if available).

In some instances, you may see a listing as “apartment with utilities included,” which essentially means that the apartment price should include virtually all of the main utilities.

You’ll still want to confirm what is and is not included. Ask about internet and trash too as these might not be considered “main utilities” and may not be included.

The cons of including utilities in rent

The owner takes on the liability for paying the bill

If a resident is responsible for the electricity and doesn’t pay the bill, the utility provider will compel the tenant to pay, and may even cut off service. But if the owner’s name is on the account, and the tenant fails to pay, the owner is responsible all the same. 

And the law frowns on so-called “self-help evictions,” in which an owner tries to compel a resident to leave without bringing the law into it. 

Tenants may have no incentive to conserve

Residents may not be inspired to save energy if they feel they are not paying for it, and might be less conscientious about, say, leaving lights on all night or maintaining tropical levels of warmth in the dead of winter. 

Rising rates can cut into profitability

Utility companies can change their rates without notice. If an owner accounts for a $100 electric bill as part of the rent, but the cost to the landlord rises to $150 in a given month, that impacts rental returns

To get around this problem, the owner can set a dollar cap on how much can be covered as part of the rent. If the cost to the owner exceeds that amount, the resident can be required to make up the difference. (This can help avoid the disadvantage of tenants having little incentive to conserve.)

The rent may appear higher to prospective renters

In highly price-sensitive markets, prospective tenants may see only the price tag, not consider the fact that it includes rent, and rule out a house where utilities are included. If they are searching for homes based on price, they may even filter homes above a certain rent. 

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Heat

If you are in a multi-unit building with radiators, there will almost certainly be no extra charge for heat. The landlord will pay the building’s heating bill in total and build that cost into the rent. However, if you and some friends team up and rent a house, you’ll be on the hook for keeping an oil burner going for heat and hot water, which could cost more than $300 a month. If you have gas or forced-air heating expect to pay at least $100 a month in the deep winter, though the cost can vary. One good way to find out what to expect is simply to ask the landlord or a previous tenant.

How Much is the Average Electricity Bill?

No matter where you live, at least part of your apartment will be powered by electric, making it one of the most necessary, as well as expensive, energy bills.

Presuming you are renting a 1-bedroom apartment, with no electric powered heat or cooling, you can expect to pay an average of $30-$50/month.

What Utilities are Included in my Lease?

When on the hunt for apartments, one of the things on your list of questions, should be to ask the property manager for details about the utilities prior to signing on the bottom line.

The last thing you want to do is accidentally get in over your head financially and then have to break the lease, likely incurring even more penalties.

Utility Costs Landlords (might) Cover

Before we can estimate the average cost of your apartments utility bills, we need to first establish which energy bills you’re actually responsible for. Despite what you may have been told verbally if it’s not in writing on a legally binding agreement, it doesn’t count.

Review your Lease or Rental Agreement

Step one is to get out the apartments lease agreement and READ IT CAREFULLY. There should be a section labeled “Utilities” or similar. This section should define what is and is not included in your monthly rent payment.

Most apartments include water and trash in the rent, however, this may not always be the case. Often a tenant will be responsible energy bills like gas, electric, and any other optional utilities.

If something is unclear, or if certain utilities are not listed at all on the apartments lease agreement, always ask to get it in writing as to who is responsible for what energy bill.

What Affects the Costs of Utilities?

Location

The location of your apartment will greatly affect your utility bill, especially your electricity and gas consumption. If you’re living in a city with a temperate climate, you won’t need to spend as much compared to living in a city with extreme weather conditions.

The location also refers to where your apartment is located within a building. Top floor apartments generally have higher heating and cooling bills because they are more exposed to the elements.

Energy Efficiency

Check the energy efficiency of the apartment before moving in. An apartment with lots of windows and a high ceiling such as a loft will let in more sunlight and air, so you won’t need to heat the apartment as much. However, during colder months, this can also mean a higher heating bill.

Size of your Rental

Obviously, a larger apartment will be more expensive when it comes to power, heating, and cooling. Even the unit’s layout can play a part; it can be more expensive to heat and cool an apartment with an open floor plan than one with delineated rooms. You only need to heat and cool the areas where you’re staying.

Cable

This is an optional expense. With the new high-definition televisions, and their digital antennae, it’s easy to get great reception on network TV, and then you can use online streaming services for the rest of your needs. This will cost you about $20 a month, if you subscribe to two services.

If you want cable, look for a deal. They come along frequently and can save you some money. But be careful; companies often have add-ons like free premium channels for three months, which will then be charged to your account if you don’t cancel when the preliminary deal expires. So make sure to keep an eye on your account, so you know what you’re being charged for. While it’s nice to have cable, and you can usually find introductory deals that include cable and Internet for about $90 a month, it’s still a lot of money compared to using a streaming service or two for about $20 a month.

Electricity

Average cost: $30-50

Electricity usually accounts for the largest portion of your utility bill. The average cost mentioned above discounts any air conditioning or heating. If you include heating and cooling in your electricity bills, it can increase by up to 32%.

There are a number of factors that can affect your electricity bill, such as the number of people living in the apartment and the amount of appliances and gadgets you use on a regular basis. The size of the apartment also matters as well; a larger apartment will consume more electricity to cool and heat.

Money-Saving Ideas

  • Beware of “energy vampires” a.k.a. Appliances and gadgets that consume electricity even when turned off as long as they are plugged in. Things such as gaming consoles, coffee makers, and phone chargers still consume electricity when not in use. They can account for as much as 20% of your total energy consumption.
  • Check with your provider. If you have multiple providers in your area, shop around to see if you can get services for cheaper. Switching is quick and easy, and you can save up to 40% on your bill.
  • Keep an eye on your monthly usage. If you notice that your electricity bills are higher than normal, check with your provider to see where the increased consumption is coming from. It might be something you can cut down on.
  • Invest in energy-efficient LED light bulbs, or better yet, use solar-powered bulbs when possible. Switch to solar-powered outdoor lighting if you live in a sunny area.

Advantages and Disadvantages of Renting When Utilities Are Included

There are benefits and disadvantages for both landlord and tenant of renting with utilities included. Tenants prefer the simplicity that an all-inclusive rental payment provides. They also save money on moving-in fees, such as connection charges, deposits, and other fees. 

What are the pros and cons to landlords of includi

What are the pros and cons to landlords of including all utility payments in the lease agreement?

Advantages of Renting When Utilities Are Included

Here are five pros of leasing a rental unit with all utility payments included.

1. Charge more for the actual rent price

One of the most significant advantages is that you can charge more for rent. Because you are taking on some of the tenant’s responsibilities, the rent can be higher. Not only do you charge to cover basic utilities, but you are also providing an extra service for your tenants. However, before offering an all-inclusive bill-paid rental lease, know precisely what your utility costs are likely to be. 

2. Rent including utilities has tax benefits

If you pay all the utilities, you can deduct the utility bills from your tax returns. This is because utilities are considered a business expense associated with running a property rental business. 

3. Attract more tenants by offering an all-inclusive lease

Many tenants prefer apartments where all the utilities are included in the lease agreement. This is because it’s easier to budget housing costs from month to month. Also, tenants may prefer not having their name on utility bills or dealing with the hassle of setting up utility payments. So, landlords may find it’s possible to reduce vacancy time by offering rent with utilities included.

4. Avoid tenants defaulting on utility payments

By including utility costs in the rent, you avoid having to ask the question: “what to do if a tenant doesn’t pay utilities?” Because all-inclusive rental agreements are typically higher, tenants must prove their ability to make monthly rental payments. During the screening process, you can check for proof of income, their credit score, and get their employer’s reference. 

5. Credit card rewards

If you can pay utilities by credit card, you could benefit from many rewards at zero cost. However, it’s worth looking for credit cards that don’t charge a payment fee before doing this. 

Disadvantages of Renting When Utilities Are Included

What are the disadvantages of rental agreements that include utilities? 

1. Tenants can take advantage of all-inclusive rents

If the tenant isn’t paying the cost of their utility usage, they lose the incentive to conserve energy. Here are a few examples: 

  • Leaving the air conditioning on when they are out of the apartment
  • Running the shower before they get in the tub
  • Turning the central heating up to tropical-like conditions

If you decide to offer rent inclusive of utilities, it makes sense to have a cap on energy usage. So, for example, say there’s a $100 cap on electricity usage. But suppose that one month, the electricity bill comes in at $50 more than the amount on the lease. In that case, the tenant will have to pay the difference as unpaid rent. 

Of course, it’s vital to take into account seasonal differences in energy usage.

2. You become liable for tenant’s arrears

While you avoid the situation where a tenant fails to pay actual utility costs, you face another problem—what if the tenant defaults on their monthly rent payments? In that case, you still have to keep paying utility bills while losing income. 

Suppose the tenant is liable to the utility company and doesn’t pay their bills. In that case, the utility provider can shut off their water, gas, or electricity. However, you can’t do that in a utilities-included apartment. Therefore, turning off utilities for unpaid rent is a costly mistake because it is a self-help eviction. 

Related reading: Costly eviction mistakes.

3. Utility increases can cut profit margins

Another consideration is that any hike in utility costs will affect your bottom line—profit. You can only increase the rent when the lease is up for renewal. So, until the end of the lease, you will have to cover the increased costs. 

But there’s another thing to consider. Some states have a cap on rent increases. This means that it may be impossible to increase rent enough to pay the actual cost of utility bills. So, in the end, you may find it challenging to cover all your rental costs.

4. Rent appears higher than average

You may find it difficult to attract potential renters because your rent price appears too high in rental listings. Remember, tenants will be comparing your rental listing to similar rental properties in the neighborhood. If the tenant uses a price filter, your rental listing may never show up. Furthermore, even if they see your listing, they may not realize that the lease includes utilities.

How to save money on utilities

Keep energy efficiency in mind when house hunting, as certain features that landlords have implemented will end up saving you money in the long run. For example, new insulation, double pane windows and energy-efficient appliances work together to help lower utility costs tremendously.

Heat efficiently

Heating an entire single-family home can quickly become one of your largest expenses if you aren’t careful. Turning the heat down when sleeping or when you’re not at home  can help you save significantly each month. If you live in an older home, consider insulated curtains or curtains made from a heavier fabric to trap in heat to reduce heating costs. Many ceiling fans have a switch that allows blades to spin clockwise, which will help push warm air that has risen to the ceiling back down into the room.

Avoid air conditioning units

If you live in a rather mild climate with a few days of extreme heat, you can probably get by without using an air conditioning unit and save money on your electricity bill each month. Use efficient cooling tips like keeping the lights off as often as possible, limiting the use of your stove and oven and opening the windows at night to cool down your home. Your landlord may have even invested in smart thermostats that use energy saving technology to help lower the cost of heating and cooling.

LED light bulbs

LED bulbs use 20% to 25% less energy than traditional light and can save you up to $500 a year on utility costs. They are also  90% more efficient at producing light compared to incandescent light bulbs. As an added bonus, LED bulbs don’t “burn out”. Instead, they slowly dim over time ultimately reducing the need to buy and replace bulbs as often.

Use less water

As you go about your day, pay attention to how much water you are using for simple tasks like brushing your teeth, washing dishes or showering. Making small changes to your routine such as taking shorter showers, turning off the faucet while brushing your teeth and only using the shortest cycle for your appliances (dishwasher, washing machine) can make a big difference over time. Consider investing in water saving tools like low flow shower heads and toilets.

How much are utilities in an apartment? Other apartment costs to consider before renting

There are a few other potential fees to consider before renting an apartment. These fees are much harder to negotiate and aren’t typically bundled with other services.

Security

Adding an alarm or apartment security system is your responsibility. You’ll also want to check with your landlord before installing security that connects to the main electrical system.

Pets

Finding an apartment that allows pets can be a challenge. Many landlords view them as liabilities and a hazard. If you find a new home for both you and your furry companion, expect to pay a pet deposit and an additional fee on top of your regular rent.

Renters insurance

Most landlords require you to have renters insurance. This provides coverage for your personal property against fire, theft, and vandalism, and saves the building from legal hassle. Some policies will also cover your expenses if your apartment becomes uninhabitable. Annual premium costs are very affordable and usually paid annually. You can also bundle renters  insurance with auto or life insurance for better rates.

Save money by being knowledgeable and keeping track of expenses. Bundle services when possible, buy what you need, and use less.

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