Who Should Pay for Utilities in My Rental Home?

Determining who pays for utilities in your Salt Lake City rental home is something you need to decide at the beginning of the relationship you have with your tenant. It’s a contractual issue and something that must be included in your lease. There are a couple of different ways to think about who should pay for utilities.

If you talk to city or conservation groups, they will tell you that 100 percent of the utilities should be charged to the tenant exclusively. That is because they will use less of a resource if they have to pay for that resource. You can include utility payments in the rental payment, or keep the utilities out of the rent and make it a separate charge the tenants pay.

At Advanced Solutions Property Management, we recommend keeping utilities out of the rent. You don’t want to combine them because you don’t want to give tenants a reason to think that your rent is inflated. Here’s an example: if a potential tenant is driving down the street and he looks at two units that are similar and one includes utilities but the other one doesn’t, he’ll look at the one that does not include utilities first. The unit that includes utilities might actually be a better deal, but the tenant isn’t going to read the fine print. The tenant is looking only at the base rental price.

We recommend that you have a base rental price for the unit that you advertise. The tenant can then compare that to other rents. Then, have the utility charges included later. In our leases, we require the tenant to pay for all utilities. You can have a utility fee if you’d rather, but however you workout the utility payments, make sure there is a base rental price from which you are working. The utilities should always be added later.

If you have any questions about how to handle the utilities in your rental home, please contact us at Advanced Solutions Property Management, and we’ll do what we can to help you out.