A high heating bill, a tenant moving out early, or five people using one shared kitchen can quickly raise the question: who pays HMO utility bills? The answer is set by the tenancy agreement, but the way bills are structured also affects rent levels, management time and the appeal of the property to prospective tenants.
For many HMOs, bills included rent is the simplest arrangement. It gives tenants one predictable monthly payment and gives the landlord control over accounts and usage. That does not mean it is always the right model. In some shared houses, tenants take responsibility for utilities themselves. What matters is that the arrangement is clear before anyone moves in.
Who pays HMO utility bills in the UK?
In a bills included HMO, the landlord normally pays the utility providers directly. The cost is then allowed for within the rent charged to each tenant. This commonly covers gas, electricity, water, broadband and, in some cases, a TV licence for communal areas.
In a bills excluded arrangement, the tenants pay the suppliers. They may put accounts into one tenant’s name, share payments between housemates or use a bill-splitting service. This can lower the advertised rent, but it can also create disputes if one person does not pay their share or leaves the property.
There is no single rule requiring every HMO landlord to include utilities. The contract is the starting point. It should state exactly which bills are included, who holds each account, whether a usage limit applies and what happens if charges rise or tenants change.
Bills included: a practical choice for many HMOs
Bills included rent is especially popular with working professionals, contractors and people relocating for a fixed period. They can budget easily and do not need to arrange multiple accounts for a room they may only occupy for several months.
It is also easier for a landlord or managing agent to keep essential services running. There is no handover period between tenants, and there is less risk that broadband or energy is disconnected because an outgoing tenant has closed an account. For a fully managed HMO, this creates a more consistent experience for everyone in the house.
The trade-off is financial exposure. Energy prices, water charges and broadband costs can change, while rent may be fixed for the term of a tenancy. A landlord needs to price the room sensibly, monitor consumption and make sure the agreement has a fair, transparent policy for unusually high use.
Bills excluded: more tenant control, more coordination
With bills excluded, tenants can choose suppliers and tariffs where the account structure allows it. The landlord has less direct exposure to fluctuating prices, and the base rent can be easier to compare with local room rates.
However, a shared house with separate tenancy agreements may not have one clear person responsible for opening accounts and chasing payments. A tenant who is named on the bill could be left covering costs when others fail to contribute. This setup tends to work best where a group rents the whole property together under one joint tenancy and has agreed how to share household costs.
Which HMO bills are usually included?
There is no standard package, so landlords should avoid relying on phrases such as “all bills included” without further detail. A well-written agreement or tenancy information pack should identify each cost individually.
The most common bills included in an HMO are:
- gas and electricity;
- water and sewerage charges;
- broadband;
- council tax, where the landlord is liable or has agreed to cover it; and
- a TV licence where one is required for a shared television.
Some landlords also include a regular cleaner for communal areas, gardening, or a licence for a streaming service. These are services rather than utilities, so they should be described separately. Tenants should not assume they are included merely because the property is marketed as furnished or professionally managed.
Council tax needs special attention
Council tax is not a utility bill, but it is one of the most common points of confusion in HMOs. In many HMOs where residents have individual agreements for rooms and share facilities, the owner is liable for council tax. This often makes sense for a bills included room-let model, as the landlord receives and pays one council tax bill.
That is not universal. Liability can depend on the property layout, occupiers and tenancy arrangements. A house let to a group on one joint tenancy may be treated differently. Students, certain apprentices and other qualifying residents may be disregarded or exempt in some circumstances, but this should never be assumed. Check the council’s decision for the specific property and record the arrangement in writing.
What should the tenancy agreement say?
A clear agreement protects both sides. It stops tenants being surprised by an extra charge and stops landlords having to argue over costs that were never properly defined.
For bills included rooms, the agreement should name the included utilities and services, explain whether the landlord retains control of supplier accounts, and set out any fair use policy. It should also say how the landlord will deal with excess consumption. For example, the agreement may state that exceptionally high energy use outside normal domestic use can be recharged after evidence and notice are provided.
A fair use policy should be reasonable, specific and easy to understand. It is not a blank cheque to increase rent halfway through a fixed term or to pass on ordinary seasonal costs. If the property has electric heaters, electric vehicle charging, hot tubs or other energy-intensive equipment, address them directly before the tenancy starts.
For bills excluded tenancies, the agreement should make clear when tenants must take over accounts, which bills they are responsible for and what proof, if any, they need to provide. It should also cover meter readings at check-in and check-out. Photos of meters, dated on the day, can avoid later disagreements.
Can an HMO landlord charge tenants for utility use?
A landlord can include utility costs within rent or, where the contract permits, recharge a tenant for actual usage. The method must be fair and transparent. If a landlord resells energy to tenants, they should not make a profit above the amount permitted under the maximum resale price rules.
This is particularly relevant where rooms have sub-meters or where a landlord receives one supplier bill and divides the cost between occupants. Keep supplier statements, meter readings and a clear calculation. A simple equal split may be practical in a shared house, but it can be hard to justify where one room has significantly higher use or where occupancy has changed during the billing period.
Avoid informal arrangements such as asking tenants for cash whenever a bill arrives. They create uncertainty for the tenant and weak records for the landlord. Where additional payment is genuinely due, explain the calculation and give the tenant a written request.
Managing rising utility costs without upsetting good tenants
The best time to manage utility risk is before setting the rent. Review previous annual consumption, current tariffs, the property’s Energy Performance Certificate, occupancy levels and likely heating needs. A five-bedroom HMO with poor insulation will have a very different cost profile from a modern, well-insulated house with the same number of occupants.
Practical improvements can reduce bills without making the property less comfortable. Efficient heating controls, draught-proofing, LED lighting, properly maintained appliances and clear instructions for the boiler all help. Tenants are more likely to use energy sensibly when they understand how the heating and hot water system works.
If costs have risen substantially, a landlord cannot simply alter a fixed-term rent because utilities have become more expensive. Any rent increase must follow the tenancy terms and the correct legal process. At renewal, a revised all-inclusive rent may be appropriate, provided it is explained clearly and remains competitive for the local market.
A reliable approach for landlords and tenants
For landlords, the most workable HMO utility arrangement is usually the one that matches the type of tenant and the way the property is let. A room-by-room professional HMO often benefits from a clear bills included package. A whole-house let to an established group may work well with tenants managing their own accounts.
TWS Properties sees that straightforward arrangements reduce avoidable calls, payment disputes and void-period complications. Whether bills sit with the landlord or the tenants, write down the detail, keep accurate records and deal with questions early. A clear utility policy gives tenants confidence that their monthly costs are understood and gives the property owner a firmer basis for managing the home well.