Best way for a landlord to manage utility bills in multi occupancy household

Fionn.ie

Hi everybody,

I know the topic is trite and got innumerable discussions over time, but I still find little to address this specific scenario.

I am about to rent out a house for the first time, 4 separate single rooms, 4 separate tenants unrelated to each other.

I can totally see the convenience of letting (say) a family take over all the bills for the property, but how could that work with 4 tenants?

Even if you ask everybody to take one bill each, so as to keep things as balanced as possible, would you ask one to take over the Bins (~25€ / month) coming out of their bank account, and another one to take the Gas?

And what happens if one stops paying?

As a landlord I would face a problem anyway in this case, but if this becomes a burden on the other tenants, too, wouldn't this push away the good tenants?

Nevermind the bureaucracy that this would entail with each tenant moving in/out.

As much as I try to think about this I cannot find a solution that could prove more convenient than keeping all the bills under my name and requesting payment when they are due (with all the other downsides that I am aware of).

To all the experienced landlords out there, any advice on this would be very much appreciated! 🙂

Field east

I assume that they will all be using the one kitchen, the one washing machine , the one dryer, etc, so the ESB bill is going to be quite considerable. A gas bill also? A refuse disposal bill. On the assumption that all the bills are currently in your name I suggest that you estimate the amount of units, etc, used by the house of 4 Individuals per month, put a monetary value on same, divide the total by 4 and charge that amount with the rent in each month - all paid in advance
NOTE if one of the tenancies has two instead of one tenant well then you decide the monetary total by 5

NOTE you might also consider reviewing the amount you are charging for services provided every six months and note that in the contract

Note you might break down in the contract the amount you are charging for each service so that there is no confusion.

And finally - in , for example, cases where a tenant has the heating system turned up high all the time thereby using much more energy than a tenant who has it turned down low and using it sparingly , it would be CRITICAL that each tenant is aware , from the start, how the cost of services provided will be calculated and review of same.

I’m assuming a lot re the above But cherry pick at your will

Mrs OBumble

https://www.boards.ie/discussion/comment/121990217#Comment_121990217

I would do similar- and did when I was head tenant in 4br houseshare.

Maybe round up the charge a bit to start with, and offer refunds based on actual bills.

Victor

Do NOT get involved in bills. If you aren't involved, you can't be liable. Let them pick their own suppliers. Most leases have a stipulation that the tenants must pay for utilities - let them pick and choose their own suppliers(s). If theri are shenanigans, let the tenants come to you to say that someone isn't pulling their weight.

Why are you letting to 4 individuals instead of one group? 4 individuals mean you have to do the chasing.

Having one bill in each name (if there are enough bills) is a sensible way to go. If one of them is a poor payer, it affects their standing with the utility company, not everyone's - and importantly - not yours.

CollyFlower

Prepay meter?

Victor

https://www.boards.ie/discussion/comment/121991001#Comment_121991001

Why? Be aware that some pre-paid meters are designed to gouge people.

If the bills are in the name(s) of the tenants, there is NO come back on the landlord.

lalababa

Estimate roughly what the bills will be and divide by 4 and include in the rent. This is a no brainer. Otherwise you'll be chasing your tail.

Victor

https://www.boards.ie/discussion/comment/121991039#Comment_121991039

And if the tenants leave the heating on and the windows open 24/7/365?

3DataModem

You are in for a massive pain in the neck. Four unrelated tenants organising bills? You'll get complaints constantly.

Estimate the total, leave accounts in your name, add to the rent. Share the bills with the tenants periodically so they can see that you are being fair.

lawred2

I lived in a similar arrangement. While the landlord did have individual leases with us, all bills were our problem. Don't know why you're getting involved.

Gas, elec, TV and broadband were all for us to manage and pay.

AndrewJRenko

https://www.boards.ie/discussion/comment/121991070#Comment_121991070

Easy enough for the landlord to maintain remote access to the heating control system and keep an eye on what's going on.

Everyone should be clearly able to see the enormous risks to the op if the bill remains in his name. As said by Victor, tenants should be able to choose the supplier they prefer, and avail of whatever State payments towards the cost. If the tenants run up huge utility bills and refuse payment, the op gets caught.

Op, as you are the beginning of the tenant process, start as you mean to continue, inform them that they are responsible for utility payments, and their name(s) are on the accounts. If they don’t like it, then let them move on.

LJ12345

Consider including the heating and bins. Heating can be remotely controlled/set to a consistent schedule and monitored through reports and you don’t want people who skimp on either. Heating will keep your house in good order, you can encourage ventilation after showers etc and you don’t want a pile of rubbish left. Electric could be a minefield with devices and hot water left on, avoid having that in your name. Tv license is up to you, if you’re leaving tv’s you could cover that cost in the rental. Everything else is personal choice and the occupants might benefit as a group in having involvement in sourcing suppliers for broadband and electricity suppliers etc

https://www.boards.ie/discussion/comment/121991456#Comment_121991456

tv licence is up to whomever occupies the house and uses it, not the LL.

3DataModem

It is not easy to put four different people's names on a utility bill. These are strangers who will be moving in / out at different times. If it was a group of friends (like my first flat share) yes it is a lot easier to get them to self-organize, but the tenants in this case will see this as a 'bed sit' arrangement.

Of course the liability falls to the landlord, but that's the price of renting four rooms separately as opposed to renting a four bedroom residence as a single residence.

LJ12345

https://www.boards.ie/discussion/comment/121991555#Comment_121991555

Re-read; I said the op could “cover that cost in the rental” the op is adding the bills on to the rent. It’s a yearly expense so if some occupants move within a timeframe it’s one of the bills that might be easier to apply to the monthly rent.

drogon.

I would assume OP wants to rent out each room individually as there is more money to be made this way, rather than renting out a house to a family or a group of people in one lease.

By doing this he/she will have to take some of the additional risks like having the utilities in their name. As none of the tenants will want to take ownership of it. This method is ideal for short term letting, like to students etc. but will be hard to manage for long term letting.

LJ12345

Bear in mind if you include all bills, there’s a higher probability of partners/friends spending a lot more time there, possibly unofficially moving in. other occupiers are less likely to complain as they aren’t paying for any additional usage.

SodiumCooled

If an average amount is added to rent then isn't the op going to be liable for tax on it? If keeping them in his name while not just send around the bill every month/2 months and the request that each tenant pays 1/4 of the bill. This could be written into the lease that payment of their share of bills is required and explain how it is to be done upfront.

This way rent and bills are kept separate which should be better from a tax perspective.

Fionn.ie

Thank you everybody for your very prompt and very sensible pieces of advice.

Clearly you have some mileage under your belt :)

The two main camps here are as follows:

- A. keep the bills under your name and charge an estimate consumption, possibly rounding up and refunding excesses.

- B. Do not get involved with bills and let the tenants sort them out among themselves.

A.

The main (not only but “main”) problem I see with this option is that if I charge a rent that “includes bills”, that extra charge is still officially “rent”.

As we know, in an RPZ (because of course it’s an RPZ, where isn’t anymore?) you can only raise your rent by 2% per annum: barely enough to keep up with inflation, never mind utility cost increases.

Whatever I set at the beginning is going to make me a loss before long.

B.

“Do not get involved”: I know, it’s what my instincts scream at me, too, but how do you address my concerns above?

- Even if you ask everybody to take on one bill each, so as to keep things as balanced as possible, would you ask one to handle the Bins (~25€ / month) coming out of their bank account, and another one to take the Gas?

(Would you accept that?)

- And what happens if one stops paying?

As a landlord I would face a problem anyway in this case, but if this becomes a burden on the other tenants, too, wouldn't this push away the good tenants?

(What’s has your experience been with this?)

And once again, thank you 🙂

mrslancaster

It's not just utility bills that is messy in this scenario. I've read lots of other threads about multi occupants renting sole bedrooms with shared access to common areas directly from owners, and whether they are tenants or licensees.

The general consensus seems to be that the RTB would deem those individuals in the OP to be tenants.

But, if that is the case then does the OP need to register four separate tenancies with RTB? Also how would that work in terms of complying with the standards for rented accommodation? https://www.citizensinformation.ie/en/housing/renting-a-home/tenants-rights-and-responsibilities/minimum-standards-for-rented-homes/

A bedroom is not a self-contained unit, nor is it a bed-sit which in the past had private cooking facilities and separate utility meters.

If the property is not four separate dwellings, and is let as a single unit in order to meet the required standards, then the four occupants would be either joint tenants, named and registered on the lease, or the first occupant would be the registered tenant with full responsibility to the owner for the entire rent and other rules eg responsible for utility bills.

That means additional occupants would be licensees of the tenant who would choose those occupants, the licensees could request (to the owner) to become tenants and added to the tenancy or can stay as licensees of the tenant. The tenant is basically the landlord to those licensees.

My understanding is that a house-share is either joint/multi tenants or a single tenant with licensees (who could subsequently ask the owner to become tenants with reference to space etc). Once the lease is signed the owner steps back from finding more occupants, that is for the registered tenant. The owner can only have four separate tenancies if it's four self-contained units or bedsits.

The other set-up recently discussed is where occupants rent rooms directly from the owner and can access common areas. The owner has continuing access, (does not need permission to enter), chooses the occupants, sets the rental period, leaves rooms vacant or not, is responsible for cleaning, utilities, refuse etc. In that set-up, the owner does not grant any tenancy.

House-shares seem to still operate in the way they did before the rtb where people move in and out but don't mind the rules until theres a problem. The regulations are complicated but many people rent in house-shares - the rules should be clearer so everyone knows where they stand. Imo.

Fionn.ie

https://www.boards.ie/discussion/comment/121992232#Comment_121992232

This would be the third option, that I was mentioning at the beginning as the easiest to arrange.

Your ideas on this?

SodiumCooled

https://www.boards.ie/discussion/comment/121992326#Comment_121992326

I think my first choice would be just let them look after the bills themselves, second choice would be share exact amount of bills separately as described in my post above.

I don't think the taking a bill each is as big a deal as you maybe feel it is. I am not a landlord but I have lived in a few house shares in the past that operated as your one will with each tenant renting individually from the LL and there was always a sharing around of bills. Some will have bigger bills than others but its all divided up at the end so no one pays more (unless you have housemates not paying up which has never happened me). Another thing to consider is that some tenants may want a bill in their name as its important for proof of address for things that they might need at their new location (e.g. a parking permit if applicable).

mrslancaster

https://www.boards.ie/discussion/comment/121992326#Comment_121992326

Why would an owner want the hassle of managing utility bills in a rented property? Unless the utilities are included in the rent (like some apartment blocks) the utilities are the responsibility of the single/joint/multiple tenants occupying the property. It's up to them how they organise the mechanics of it.

If OP keeps utilities like heat & light, refuse, broadband etc in their name and recharges the bills, the easiest way to do that would be an equal split but that could be viewed as unfair unless there's equal consumption. Other way is a % based on the square footage of each bedroom plus an equal share of the common areas.

Mrs OBumble

https://www.boards.ie/discussion/comment/121992500#Comment_121992500

The owner would want it because of the extra return to be made from having individual renters rather than a group.

As a tenant, I would NEVER move into a setup like this: I want to choose who my housemates are. But in Ireland people seem to have a tolerance for this.

It comes down to risk vs reward.

I expect the bills-portion of the rent to be non-taxable, because there would be expenses to balance out the income.

Red Silurian

1. Charge a utilities deposit equal to the average monthly bill for the last year when everybody moves in. Add 10% if you want a cushion.
2. Include broadband, waste and TV in your rent amount, these are fixed and that way it's only heating and electricity you need to worry about
3. Once the bills come in leave a copy on the dining room table or pinned to the fridge, text all the tennants to tell them it's there.
4. Collect a quarter of the bill with the next months rent
5. If/when a tennant leaves give them the utilities deposit back and collect same from whoever moves in next
6. Make sure the utilities are on monthly plans and tennants officially move in/out on the first day of the month, nothing worse than having to chase somebody

Field east

https://www.boards.ie/discussion/comment/121990725#Comment_121990725

i

https://www.boards.ie/discussion/comment/121990217#Comment_121990217

i assumed that there was only one gas /ESB meter in the house. What could be done is to rent the house to four tenants AS A SINGLE GROUP and register the meters in his/her/ their names. In that case make sure that the contract states that ‘ ALL tenants are jointly and severally liable for the payment of the full rent ‘. This means that if one of the 4 tenants drops out the remaining three are liable for the full rent. Strongly suggest that you deal with one of the tenants re setting up the rent payment by STANDING ORDER and any other matters arising

Field east

Maybe review utility payment every three months then until you get the measure of it

https://www.boards.ie/discussion/comment/121993277#Comment_121993277

Or, tell the 4 tenants that it is a condition of the tenancy that they are responsible for utilities, and let them sort it out between themselves the way every other rental with multiple occupants does.

Field east

Fiona.ie - are you also living in the house?

Fionn.ie

https://www.boards.ie/discussion/comment/121993422#Comment_121993422

I'll not be living in the house - the 4 tenants will be on their own, sharing one living room , one kitchen, one gas/electricity meter, etc.

I believe that Mrs OBumble has voiced the concerns that I believe many a tenant (or applicant) might express.

May I understand if in your general experience you have seen the arrangement of this kind of setting with the bills left under total responsibility of the tenants, often enough and without causing too much concerns or issues?

Victor

https://www.boards.ie/discussion/comment/121992232#Comment_121992232

Tax is paid on profits. If the bills are included in the rent and the bills are paid from this, there is no extra income, so no extra tax.

Red Silurian

https://www.boards.ie/discussion/comment/121993412#Comment_121993412

If it were me I wouldn't be a fan of leaving utilities to the tenants, to much risk of them walking

SodiumCooled

https://www.boards.ie/discussion/comment/121994115#Comment_121994115

If it’s exact amounts and paid separately to rent I agree, if it’s picking an average number for all bills and the same every month then I think it a bit of a mess.

https://www.boards.ie/discussion/comment/121994849#Comment_121994849

If they walk the bill will follow them it’s not going to come back on the LL, it’s a very good reason to have the bills in a tenants name for this reason.

https://www.boards.ie/discussion/comment/121994849#Comment_121994849

That is the benefit of the tenants being responsible for utilities, the account is theirs, not the op’s, if they walk, the account/debt walks with them. If the op retains the utilities in his name and the tenants walk, or worse, stop paying rent, the op bears the responsibility for payment of the utilities.

I really can’t understand why anyone would advise the op to keep the utilities in his name and start messing around with paying it, then recovering the cost from the tenants. If he makes it a condition of the rentals from the start that all utilities have to be in the tenants names and they are responsible for working out monthly payments, like all of us have done in house shares, then there is no messing, the op just takes in the rental income. If they don’t like that arrangement, fine, move on, someone else will take the rooms, it’s a LLs market.

mrslancaster

https://www.boards.ie/discussion/comment/121992537#Comment_121992537

Agree about the tax treatment - some extra accounting for the OP if they decide to manage tenant utilities.

Also agree that it's odd the way some house-shares still operate here and that goes back to pre-rtb times when L&T rules were widely ignored and owners called the shots. Now tenancies are enforced by the rtb and people are still getting to grips with different aspects of what they can and can't do. Anyone with a tenancy has a right to choose their own housemates, the owner should have no part in that after initial vetting and granting of the tenancy.

As for utilities, tenants should manage those directly.