Demand for rental accommodation in the capital with bills included in the cost of renting has increased significantly since April, a study reveals.
Findings from rental and real estate agencies Benham and Reeves, however, show that tenants still pay a rental premium for the pleasure.
The firm analyzed the current rental stock available across London and found that currently only 5% are offering to cover the cost of bills as part of the monthly rent.
Availability is highest in Brent, where 12% of all current rental properties listed on the market include the cost of bills in the rent, followed by Hounslow and Barking and Dagenham (10%).
Skyrocketing cost of energy bills
With the cost of energy bills skyrocketing in recent months, it’s no surprise that demand for these rental units is also high.
Benham and Reeves found that 34% of rental properties that include the cost of bills in the rent have already had a tenancy agreement, up from just 26% in April this year.
The agent was also keen to consider whether including the bills in the rent was worth it for tenants.
They found that the average rent for a rental in London where bills are included is currently £3,045 per month, an increase of 51% from the £2,023 paid in April 2022.
Properties without the cost of invoices covered
Rental properties without the cost of bills covered are understandably more affordable at £2,460 per month, although that cost is still up 43% since April 2022.
The average cost of monthly bills is now £321 in the capital, an increase of 34% since April alone.
Despite this increase, those who pay their rent and bills separately are still paying just £2,781 a month.
That’s £265 a month less than the average rent for a property with utilities included, a difference of £3,175 a year.
Cost of paying bills and rent in one payment
What’s more, in April the cost of paying bills and rent in one payment was just £59 – or £711 a year – compared to those who paid rent and bills separately.
This represents an increase of £206 per month or £2,464 per year since April, for those opting for the convenience of a rental home with bills included.
Marc von Grundherr, Administrator of Benham and Reeves, said: “Many tenants prefer the convenience of a rental property where all running costs are covered in one monthly payment with their rent.
“Of course, this rental cost is going to be higher than a property where bills are not included, and landlords may well charge more as a contingency for a less stringent approach to managing gas, electricity and water.”
“Increased level of comfort”
He added: “However, as our research shows, just a few months ago it was an extra £59 per month, which is a very manageable increase for such a high level of convenience.
“But since then the cost of living crisis has gotten out of control and the cost of running our home has been one of the driving factors behind this.
“Now the increase in asking rents for rental properties including bills is huge, having risen by more than £200 a month since April alone.”
Mr von Grundherr continued: “Of course it’s not down to savvy homeowners trying to offset their own high energy costs, it’s simply the reality of the world we live in now.
“However, it is important for landlords to consider how much they might be able to pay if they find themselves with a tenant who plans to work from home this winter, as it could leave them out even when charging a rental premium to cover increased operating costs.
“At the same time, any landlord who chooses to keep invoices in their name may also be liable if their tenant fails to cover these costs.”