Drafting lease agreements

When it comes to drafting lease agreements for tenants, landlords can opt between two main types: non-inclusive and all-inclusive. Choosing between offering all-inclusive or non-inclusive rental agreements is a significant decision for landlords, as both options come with their own set of advantages and disadvantages.

We’ve simplified the process by breaking down each type of rental agreement to assist you in making a more informed decision.

NON-INCLUSIVE AGREEMENTS

A non-inclusive tenancy arrangement signifies that tenants are responsible for their own utility and service bills, separate from the rent. This includes payments for utilities such as gas and water, council tax and broadband services. In this setup, the landlord’s sole financial interaction with tenants involves collecting the monthly rent.

“A non-inclusive tenancy arrangement signifies that tenants are responsible for their own utility and service bills, separate from the rent.”

The primary benefit for landlords in adopting non-inclusive tenancies lies in the simplicity of handling a single payment. Tenants, on their part, take up the mantle of managing agreements with service providers and ensuring timely payments directly to them rather than through the landlord. This arrangement can significantly reduce the administrative burden on landlords, particularly those managing multiple properties, making it an attractive option for many.

However, non-inclusive tenancies may not be as appealing to a younger demographic, including students, who often prefer the predictability of a single, comprehensive payment covering all living costs. In scenarios such as Houses in Multiple Occupation (HMO), the desire for evenly split bills can make inclusive tenancies more desirable. Furthermore, non-payment of utility bills can indirectly affect landlords, leading to potential disputes and unwanted stress.

ALL-INCLUSIVE TENANCIES

Transitioning to the concept of all-inclusive tenancies, this model amalgamates rent and other household bills into one consolidated payment. Landlords have the discretion to decide which services are included, commonly covering utilities, broadband, council tax and TV licence fees.

All-inclusive tenancies are particularly appealing among younger tenants and those residing in HMO settings. They simplify budgeting and eliminate the hassle of bill splitting. Offering an all-inclusive package can enhance a property’s appeal to a broader audience, albeit introducing a greater degree of responsibility on the landlord’s part.

The all-inclusive model necessitates ongoing coordination with various service providers, a task that can become complex for landlords overseeing multiple properties. Variability in utility usage among tenants can lead to fluctuating costs and potential overuse, posing challenges in managing expenses effectively. Landlords can employ utility bill management services to streamline payments and maintain profitability despite these hurdles.

Don’t forget, our professional friendly advisors are on hand to support you and can help you explore all of your options.