Rent and utilities: how to organize the payments?

On top of the rent for the landlord, the tenant must also cover administrative rent and other utility fees. But what is the best way to manage these payments? Choosing the right method depends on your preferences – there are several options to choose from, and we outline them below.
Published date 20.04.2023
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Rent and utilities: how to organize the payments?
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4. Tenant pays a deposit for fees and charges

This method is similar to including utility charges in the total monthly rent, but here, instead of a fixed payment, each month, the tenant pays a deposit designated by the landlord. At the end of the rental period, the sum of the deposits paid is compared with the real costs incurred for the payment of utilities, and then, the landlord settles it with the tenant.

This solution has many advantages: it protects the landlord from the tenant's wasteful use of utilities and, in most cases, saves time. Keep in mind, however, that if the service provider does not keep monthly records, it will be necessary to write down the meter readings every month.

Moreover, final billing may not be possible until some time after the end of the lease, as some bills arrive late. This can lead to difficulties in communicating and settling the payments with the former tenant.

5. Landlord transfers utilities to the tenant

This solution requires significant effort at the beginning of the lease but results in an increased sense of security for both parties. The landlord notifies the suppliers of the need to transfer the utilities to the tenant, and the tenant signs direct contracts with them. Ultimately, the tenant is therefore obliged to pay the bills, and the landlord, in legal terms, has nothing to do with them.

As a result, the landlord saves time and stress, and the tenant does not have to worry about being charged for more than their actual consumption. Landlords who pay flat-rate taxes don’t have their taxable income increase, and the tenant feels more connected to the apartment, which makes it more likely that they will decide to stay there for a longer period of time.

Transferring utilities to the tenant is very advantageous, but it only makes sense for a lease planned to be a long-term one. To use this method, the owner must go to the building administrator to arrange the administrative rent transfer and also contact the suppliers of all the services hooked up to the apartment – both at the beginning of the lease and after it ends. And then all over again with the next tenant. It's unlikely that anyone would want to repeat all these acrobatics very often.

Which method will work best for you?

To answer this question, consider your main priority. Is it control? Saving time? Tax optimization? Security? Once you've thought this through, you can easily decide how to organize administrative rent and utility payments with your tenant.