Bills-inclusive rental contracts can help landlords attract tenants and make certain types of properties easier to manage, but with energy prices rising, the sums now often don’t add up.
Energy prices have been volatile since Russia’s invasion of Ukraine in 2022, with the latest conflict in the Middle East adding renewed pressure. Ofgem’s energy price cap jumped 13% in July and will rise by another 4% in October, taking the typical annual dual-fuel bill to £1,723.
And that volatility has become even more of a challenge for landlords since the Renters’ Rights Act came into force in May. Landlords in England can no longer simply increase the rent when their costs rise: increases are limited to once a year, must follow the statutory process and can be challenged by tenants if they believe the new rent is above the market rate.
Who includes energy bills in contracts?
Including energy bills with the rent is comparatively rare for conventional private lets, with new research from LegalforLandlords finding just 14.9% of rental listings across Britain include bills.
For this sector of the market, it is primarily a way of making the property more attractive in competitive rental markets where landlords need to work harder to attract tenants.
If, as is often now the case, demand is strong, there is little incentive for a landlord to take the risk of covering the energy bills for a fixed price.
Unsurprisingly, the National Residential Landlords Association (NRLA) says, in recent years, bills-inclusive packages have become less common, with landlords particularly wary of taking responsibility for gas and electricity because they have little control over how much tenants use.
Shared accommodation
There are real practical reasons, however, for including bills in rents for shared accommodation, especially student properties and HMOs, where several unrelated tenants would otherwise have to decide whose name goes on the accounts and how the bills are divided, with yet more complications when people move in or out.
There are high levels of demand for this type of arrangement among students. A 2025 survey of 2,290 students by Unipol found 46% considered having bills included in the rent one of the most important things they wanted from their accommodation.
Sim Sekhon, Group CEO of LegalforLandlords, says: “Student accommodation has long used the simplicity of bills-inclusive renting as an attraction.”
But landlords still need to protect themselves against rising prices and unexpectedly high consumption, and there are two main ways of doing this.
The first is a fair-usage clause, which sets either a usage or monetary allowance for the energy that is included in the rent.
Its terms need to be clearly set out in the contract, including what happens if the allowance is exceeded. Tenants who use more than their allowance can then be required to cover the additional cost, with bills and meter readings used to calculate how much is owed.
The second route is to keep utility payments separate from the rent altogether. The tenancy agreement can require tenants to reimburse the landlord for gas, electricity or other utilities, allowing changes in the actual cost to be passed on rather than absorbed within a fixed inclusive rent.
Whichever approach a landlord chooses, Ofgem’s maximum resale price rules mean they cannot mark up gas or electricity to make a profit and can only recover the cost they have actually incurred.
Build-to-rent
Bills-inclusive rents are also used in build-to-rent, but for different reasons. Operators can offer them alongside other services and amenities as part of the overall rental package, giving prospective tenants the convenience of dealing with more of their housing costs through a single provider. LegalforLandlords boss Sim Sekhon says build-to-rent operators “can use it alongside other perks to make their developments stand out to prospective tenants.”
