Different Ways to Collect Payment for Utilities in a Rental Property

Some landlords include the utilities on the monthly rent. This has both advantages and disadvantages. When the utilities are included, the landlords don’t have to send the bills to the tenants but rather pay them automatically during their due; therefore saving time and effort from the calculation and from handing out. For this, tenants have to be charged higher than the regular rate. Tenants, though, can take advantage of this through excessive use of water or electricity. If that happens, it’s going to be a big drawback for most landlords because they have to pay the excess amount themselves. Therefore for some, metering the premise separately is more ideal in dealing with the tenant’s utilities rather than the other way around.

Technically, the landlord is required to include the utilities at a monthly rate if the premise is not separately metered. That’s why many rental property owners use a separate metering system if they have more than one tenant occupying the property to avoid confusion and prevent irresponsible tenants from taking advantage. If the utilities are paid by the landlord, it is tax-deductible. Therefore in some countries such as Australia, there are laws that allow the property owners to file a claim for cost deduction in utilities for the excess that they pay. If the utilities are paid by the tenant, however, property owners are not allowed to claim this.

When utilities are included in the rent, there are several considerations that a landlord has. Assigning a fixed rate per month enables the landlord to keep the bills in their name. This makes the turnover easy because they don’t have to change the name. But again, the potential problem will be the excess usage that a tenant might have. This is the reason why most rates are higher for a fixed fee. Another advantage is that during troubleshooting, it will be more convenient for the landlords because they have to always involve the tenants in every transaction. However, when one chooses this system, the property owners should strictly follow the rates allowed by the city or else there will be legal consequences.

Now when property owners charge a monthly fee, they have to work on the bookkeeping themselves. This will require extra time and effort. Though, there are many available information for a landlord to learn from if he chooses to charge his tenant for monthly utilities. For this, a landlord can apply both a fixed rate and a fluctuating rate. Whatever the landlord chooses from these options, it’s always important to include this on the lease agreement to avoid legal repercussions and expensive penalties. And lastly, permissible rates should always be considered here because violating them will negatively affect the investment return as they might possibly end up spending so much for the court case.      

If the property owners choose to use the tenants’ names for the utilities, landlords should make sure that their responsibility is fulfilled. It is more convenient for the landlords as tenants can pay the bills directly but again, the downside of this is that it will require another effort that needs a lot of time. This is why many property owners choose to be flexible and use different approaches.

To learn more about this method, contact our office Jaxon Texas now and ask for more details about this. Again, always remember that each of these methods has its own advantages and disadvantages. If you want to be sure and you don’t want to waste your investment, call our staff first before making a final decision.