Unfortunately, there are some downsides to this type of rental agreement. Many renters come across these issues only when they cause a problem, but it's best to consider the advantages and disadvantages before you commit to a lease.
Advantages to Utility-Inclusive Rental Agreements
- You have fewer bills to keep up with each month.
- There is never a risk of having your utilities disconnected if you experience financial obstacles.
- If a heat spike increases your energy consumption, you don't have to worry about paying a higher-than-expected bill.
- You don't have to spend time reviewing monthly utility bills and calling the service providers if you are overcharged or have other questions. In most cases, you will never see the actual bill.
- You don't have to worry about passing a credit check or paying a deposit to secure utility services in your name.
Disadvantages to Utility-Inclusive Rental Agreements
- Some landlords will place a cap on the amount of electricity used by each tenant. If you go over the maximum allowance, your leasing contract may give them the right to charge you a fee. If you routinely use more energy than allowed, the fees could easily top what you would pay by having the electricity in your own name with no usage restrictions.
- If the landlord is paying for the utilities, they may pay more attention to your lifestyle. For instance, they may notice if you run your air conditioning even when you're not at home or if you leave a door open while the air is in operation. This is more of an issue if you live in a small apartment complex with a heavy on-site management presence.
- Some landlords will charge more for utilities than they actually pay out for those services. They may determine the average utility expense for the entire building or apartment community and then split it evenly among all units, even though some tenants will use more of the services than others. They may also charge you more than they pay for your utilities in order to increase their profit from the rental unit.
- You have no way of knowing if this is the case because they don't have to show you the utility bills.
Making Your Final Decision
Some renters do benefit from having all utilities covered in their rent. For instance, college students may find it easier to make one rental payment each month rather than tracking utility bills on top of the rent. Parents paying for a student's living expenses may also prefer to make one rental payment that includes paid utilities. Some adults need this type of agreement because they aren't able to secure their own utility accounts due to previously unpaid bills.
If you decide that you want an apartment in Tempe that includes utilities or the apartment that best fits your needs happens to include these expenses, make sure to ask if there are limits on utility usage. If the answer is yes, find out what the limit is and how it is monitored. You should also ask if there are charges added to your rent if you go over the maximum usage allowed. Think about your lifestyle and daily habits to determine whether you can realistically live with those limitations.