Should Landlords or Tenants Pay for Utilities?

If your rental property offers utilities your tenants will use, then you may be wondering who should cover any associated fees. On one hand, requiring tenants to pay for utilities can alleviate the cost from you, but there are pros and cons to having rent including utilities.

Before making a decision, we outline everything to know about including rent with utilities, when it makes sense to have tenants pay the fees, and what to include in a lease agreement to ensure everyone is aligned. 

What Does Utilities Included Mean? 

Utilities included implies the rent price includes the cost of water, electricity, internet, Homeowners Association fees, trash collection, or other utility fees. If you market your rental property as utilities included, it’s important to explicitly state which utilities the tenants are responsible for paying in the rental listing and lease agreement. 

The lease agreement should also state if they’re responsible for setting up those utilities once moved in or include the utility fees in their rent payments.

Are Utilities Usually Included in Rent?

Landlords can vary on whether or not utilities are included in rent, but it’s common for some rentals to include utilities in the rent price. However, there are also rentals that do require tenants to cover the cost of common utilities. If tenants are looking for rentals that include utilities in the rent price, most apartment hunting websites allow tenants to filter listings by that criteria.

How to Decide Who Will Pay for Utilities 

Deciding who pays for utilities during the lease term can be stressful, but certain factors can help you make a decision. Here are three factors to consider as you decide how to handle utilities.

1. Rent Price

Your rent price should typically be based on seasonality, local rental comps, your operating expenses, and how much profit you hope to generate each month. If your current rent price is on the higher end for your area, then adding utilities may limit the number of tenants that can afford to rent your property. 

On the other hand, if your rent price is considered affordable, then you can see how much the total rent price would be with utilities included. 

2. Create Interest in Your Rental Listing

If you’re listing your rental in a competitive market, then you can market how your rent price includes utilities to generate interest from prospective tenants. Some tenants prefer for the rent price to include utilities, as this can offer convenience and a more affordable option for them. 

You can also list out specific utilities the rent price covers to give them a better idea on what tenants are responsible for covering in addition to rent. 

Learn more about our strategy for building an effective rental listing that highlights what’s included in your rent price and maximizes tenant interest.

3. Control Over the Utilities

Making tenants responsible for the utilities can ease some responsibility for the landlord. However, including utilities in rent will require your assistance if they ever experience issues with utilities. For example, if they’re having issues with their internet connection, then you will need to help them troubleshoot the issue.

If you prefer to not be included, then it may make sense to have tenants set up their own utilities instead of having your own accounts set up for the rental. 

How Most Landlords Handle Utilities 

Best practice differs based on location and circumstance. Below is a breakdown on how most landlords handle utilities for their rentals and who is responsible for which utility bill:

Utility	Paid By
Water and Sewer	Landlord
Trash Collection	Landlord
Internet and Cable	Tenant
Security/Alarm System	Tenant
Natural Gas	Depends
Electricity	Depends

It’s common for landlords to include water and trash because these can be difficult to transfer from individual to individual. It’s also potentially risky to not have water flowing through your pipes, especially in the winter, so ensure everything works.

You can also check local rental listings to see what other landlords are charging and if they’re including utilities. If you find that other landlords are not, then including them for your rental may help your rental listing stand out in a competitive market.

What If You Want to Pay For All Utilities?

If you’re paying for all utilities, you have a few options:

• Increase your rent price and bundle utilities and rent.
• Charge a flat monthly fee for utilities (you’ll want this to be the average utility cost each month).
• Invoice your tenants for the utility bill each month so it perfectly matches how much they use.

There are different ways to collect payments for utilities, so it’s important to determine the option that’s best for you.

Are There Laws About Rental Property Utilities?

Landlord-tenant laws differ by state. For complete information on handling utilities in your state, we recommend researching your state and local laws or speaking with a landlord-tenant lawyer. These are some common laws on utilities:

• The unit must be safe and habitable: All states require that the rental property be safe and habitable for tenants, including having proper heat in the winter and making sure that everything is up to code.
• The unit should be at or above 65 degrees: This is important because you want to provide a safe and comfortable temperature for your tenants, and you don’t want your pipes to freeze in the winter.
• Utilities cannot be shut off: Landlords cannot turn off the utilities in a rental property in any situation where the tenant is still living in your property — including in cases of eviction. 

How to Address Utilities in Your Rental Lease 

If you do decide to include utilities in the rent price, your lease agreement should inform the tenant on who pays what. This can be done by including three clauses:  

1. Utilities Clause

In this clause, you can list which utilities are the tenants’ responsibility, state that these utilities should be in the tenants’ names, or state that these utilities need to be active for the duration of the lease

2. Heat and Hot Water Clause

This clause informs the tenant that you agree to provide access to heat and hot water. Your clause on heat and hot water should also specify who will pay for heat. While you’re legally required to provide access to heat and hot water, it may be the tenant’s responsibility to set it up and pay for it.

3. The Lessee to Maintain Clause

Your lease should have a Lessee to Maintain clause, which says tenants cannot misuse or neglect water, gas, or other utilities on the premises. 

What Should You Do if a Tenant Doesn’t Pay for Utilities? 

If you’ve decided that tenants should pay for their own utilities, then this should be stated in the lease agreement. In most instances, the tenant will be responsible for handling the bills for each utility. But if they experience issues with their utilities, such as no hot water, then you will need to assist with the issue to get it resolved in a timely manner. 

Generally, issues impacting utilities are categorized as a maintenance issue that the landlord will need to help with resolving.

Access Lawyer-Reviewed Lease Agreements 

Outlining who is responsible for which utility in your lease agreement can ensure all parties are informed on the expectations. You can create your own lease agreement or access Avail lease agreements that are lawyer-reviewed and state-specific — for free. You can also sign your own ready-to-sign lease agreements with Avail at no additional cost to either party.

Create an account to make a lease agreement for your rental and collect rental fees from tenants.