Utilities

[Matt C.]

I just purchased a single family rental property in western Houston, specifically in the Katy/Cinco Ranch area. I've got renters lined up to move in for July 1, but I have a question about utilities.

Are there any utilities that I should keep in my name and just bill the tenants for? I know I've heard horror stories about tenants not paying resulting in a lien on the house instead of on the tenants credit. Obviously they need to pay electric, but what about water and gas?

[Matt C.]

I also know in this area houses rent for 1700-3000+ and the average renter is renting because of mobility more than finances. I'm not as worried about a tenant shorting me as I would be in a lesser area. Then again maybe I'm placing too much faith in my tenants.

[Deanna G.]

Hello Matt,

All my tenants pay all of their own utilities, with the exception of one.  I have one lady who would only pay her water bill when the city sent her a disconnect notice.  The city started sending the water bill to me, because they couldn't collect from her.  I told the city I wasn't going to pay for water I didn't use.  I asked them for a breakdown of what her monthly bill should be and they provided me an estimate of $69.  I raised her rent $75.00 and told her I would be paying her water/sewer/trash going forward.  I gave her 2 months notice and I also included a clause the made her responsible for any amount over $75.00.  This has worked great.

Good Luck

[Kelly N.]

Hi Matt,

I would have them put the utilities (all of them) in their name, but see if your utility company has a "landlord policy" where they will revert back to you without a switchover charge when the tenant takes the utilities out of their name.  You would also be notified if the tenant doesn't pay their bill.

Kelly

[Marcia Maynard]

In most cases, by having a good rental agreement in place, you can task SFR tenants with paying the utilities and if they fail to do so, take swift action to bring them back into compliance. If a tenant is inept or lazy about paying bills on time, but are otherwise a good tenant, do as @Deanna G. suggests and raise the rent enough to cover your trouble. 

If the rental unit is a furnished rental, student rental, vacation rental, short-term rental, or not separately metered, then including utilities with the rent may make sense. Garbage service is usually a flat fee and it's easy to incorporate the value in the rent. In our area, garbage service is mandatory and can become a lien on the property if it goes into arrears, so it is one utility we are more likely to include with the rent. Utilities with a price based on variable consumption (such as water, electricity, natural gas) not so much.

[Michael Noto]

What does your lease outline as far which utilities will be the responsibility of the tenant and which will be the responsibility of the landlord?

If the tenant is paying electric and gas then they should have this in their name.  No lien will be put on the property because a tenant doesn't pay an electric or gas bill.

Water is a different story.  Is it typical for a tenant to pay for their own water in your area?  If it is then I would suggest keeping the water in your name and billing the tenant.  Why? Not paying a water bill could eventually lead to a lien being placed against the property and not the tenant.

[Account Closed]

I've seen landlords do it both ways, and have heard success and horror stories as well on both sides..It's really up to you, the most common way is to have them all in the tenant's name, since if they don't pay the bills, they simply cut off their services..how does that really affect you? 

Putting them all under your name and averaging a monthly amount and adding it to the rent is also a common practice. Say the average in utility bills is about 100 bucks, and out of the 12 months, 10 are in reality about 80..and the other two they go over 110, 150 ? You'd still be covered..This could also be risky! The point is It's really up to you whether you want to deal with it or not!

[Matthew Paul]

if you were paying the utilities , I would be really warm in the winter and very cool in the summer .