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‘All bills included’: Ticking Timebomb For All-inclusive Tenancies

‘All bills included’: Ticking Timebomb For All-inclusive Tenancies

As energy bills soar for households across the UK, there are signs the cost of living crisis could spell the end for ‘all inclusive’ tenancies.

The number of tenancies advertised as having ‘bills included’ in July was 90 per cent lower than figures recorded in January of this year, according to UK lettings technology specialists Vouch.

Numbers dramatically decreased in March, just ahead of the first Ofcom price cap changes.

Rental contracts with ‘all bills included’ shot up in popularity this year as tenants sought to try and regain a degree of control over monthly outgoings. Rightmove data published this week shows searches for ‘bills included’ have overtaken pets and gardens for the first time.

An estimated 585,000 households — equivalent to 13 per cent of all those renting in the private market — have energy bills included in their rent, according to Citizens Advice. All-inclusive tenancies are popular for student rentals, HMOs and in many new build-to-rent developments.

But the cost of living crisis is putting landlords off.

Jack Stone, lettings director at Draker Lettings said with the current unpredictability in the cost of living, for the most part the all-inclusive tenancy has become a “thing of the past”.

He added: “On the odd occasion a landlord might allow the bills to remain in their name but with the physical bill being passed across to the tenant, which relieves the need for additional admin whilst ensuring the tenant remains responsible for payment of all bills.”

It comes as the energy price cap, the maximum yearly tarriff suppliers can charge households, is set to rise by a staggering 80 per cent to £3,549 in October.

The National Union of Students (NUS) said while it had not yet seen landlords moving away from all-inclusive offers, it had concerns this could happen when the energy cap rises again.

A spokesperson said: “It would be highly irresponsible and potentially unlawful for any accommodation provider to retrospectively change a student’s terms and conditions after they’ve signed a contract. We recommend that students reach out for advice from their students’ union if their provider is trying to hike costs.”

The union also echoed concerns raised by UK charities that students in all-inclusive tenancies will not have the government’s £400 energy bill rebate passed on by their landlord.

It said renters could miss out on the energy rebate if they are not the bill payer, because rebates would be paid to the landlord.

Jonathan Daines, founder & CEO of LettingaProperty.com said he had also seen a “shift away” from all-inclusive agreements for new tenancies, adding “we’d endorse that in the current climate. Where existing agreements are in place, landlords are obliged to honour those obligations.”

Meanwhile Deenie Lee, co-founder of The Property Marketing Strategists said its recent survey of 2,500 Gen Z’s found 70 per cent preferred all-inclusive bills even if it costs them more — as they are then able to budget for it.

Lee said: “Switching to an individual billing model will appeal to landlords given the energy crisis, as it will bring down ‘rents’ superficially. But it is a short-termist approach, landlords should think of the bigger picture for a lower risk strategy - long term tenants over short-term gains.”

Adam Male, chief revenue officer at online lettings agent Mashroom, said the drastic changes in the energy price cap meant it would be hard for landlords to keep up with the rising costs in bills. He said: “Scrapping all-inclusive bills might be the only option for landlords to keep their own costs down and allow tenants to be responsible for paying for their own energy usage.

“If landlords decide not to offer all-inclusive tenancies in the future, this could have a negative impact with a reduction in rental stock, something which is already a major issue in the private rental sector.

“A shortage in all-inclusive tenancies could drive up rental repayments, as well as make it more difficult for tenants to obtain the property they want to live in due to the increased competition from fellow renters.”

Birmingham is the Nation’s Rental Repossession Capital as Cost of Living Crisis Brings Concerns of a Spike in 2022

New market analysis has revealed that, so far this year, Birmingham is the rental property repossession capital when it comes to landlords reclaiming their homes from problem tenants.

When a landlord wants to remove tenants from their property, they often have to go to the county courts and file a repossession order.

The motivation is usually rent arrears which see the tenant failing to pay rent for an extended period of time and refusing to vacate the property.

During the first quarter of this year alone, there have been 3,737 rental property repossession orders granted in England and Wales.

27% of these repossessions were targeted at tenants in London, 15% in the South East, with the North West also accounting for some of the highest levels at 11%.

However, the analysis by Barrows and Forrester shows that at local level, it’s Birmingham where landlords have been most active with regard to rental property repossessions.

This city ranks top with 81 taking place in Q1 of this year, with the London Borough of Lewisham not far behind with 69 in total.

High numbers of repossessions have also been reported in Bournemouth, Christchurch & Poole (60), Brent (55), Greenwich (55), Ealing (54), and Newham (48).

While these locations reported a large number of landlord repossessions, there are 19 locations that reported absolutely no repossessions in Q1 2020.

These include South Norfolk, Monmouthshire, Harlow, Guildford, and South Staffordshire.

Managing Director of Barrows and Forrester, James Forrester, commented:

“As the nation’s second city, demand for rental homes in Birmingham is high and this demand is only increasing as more and more people choose to live and work within the city.

Birmingham is undergoing a phase of extensive regeneration, bringing new business to Birmingham, not to mention the city hosting the current Commonwealth Games, so there are plenty of high quality applicants looking for accommodation at present.

With the government doing their best to deter buy-to-let investment by dampening the financial returns on offer, Birmingham’s landlords can ill afford to have their home occupied by a tenant who is failing to pay their way, so it’s understandable that a notable number have decided to clean house and remove problem tenants so far this year.

Given how severe the nation’s current cost of living crisis has become and how long it’s expected to last for, we would be naive not to assume that this number may continue to climb.

Of course, the move to repossess a rental property will always be the last resort for any landlord and the vast, vast majority will always manage to come to a suitable agreement with their tenant prior to this requirement.

In fact, when you consider that there are around 4.4 million rented households in England, the number of rental homes being repossessed is really very small.”

Table shows the number of repossesions in England & Wales during Q1 2022
Location Landlord (all types) – repossessions 2022 Q1 % of total
London 1,027 27%
South East 551 15%
North West 422 11%
South West 323 9%
Yorkshire and the Humber 305 8%
West Midlands 285 8%
East Midlands 271 7%
East of England 251 7%
North East 193 5%
Wales 109 3%
England & Wales 3,737 100.0%

Table shows areas of England & Wales with highest repossession numbers for Q1 2022
Location Landlord (all types) – repossessions 2022 Q1
Birmingham 81
Lewisham 69
Bournemouth Christchurch and Poole 60
Brent 55
Greenwich 55
Ealing 54
Newham 48
Liverpool 46
City of Bristol 46
Redbridge 46
Hillingdon 46
Haringey 45
Bradford 44
Bexley 40
West Northamptonshire 40
Bromley 39
Cornwall 38
Barnet 38
Sunderland 37
Milton Keynes 36

Repossession data sourced from Gov.UK


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