Utilities are the essential daily services that a person needs in order to have a working, functional living space.

What Are Utilities?

An Essential Property Management Term

Utilities are the essential daily services that a person needs in order to have a working, functional living space. Going beyond the other necessities for life, such as a roof and walls, utilities are part of what makes any living space truly livable. 

Types of Utilities

The types of utilities needed at your rental unit will vary greatly depending on the age of the property, its location, and the requirements of the tenants.

Electricity

One of the mainstays of modern civilization, electricity is essential for everyday living. Your rental unit is likely serviced by your local electricity utility such as Duke Energy, Xcel, or Pacific Gas & Electric, and that’s who will bill you each month depending on your electrical usage. Electricity rates vary depending on your location, usage, and local tax rates.

Although air conditioning costs aren’t themselves considered a utility, AC units tend to be some of the most electric-hungry devices in a home. If your property has an AC unit, you’ll often see far higher electricity costs in the warmer months.

Water

Another absolute essential of any living space is running water. Your local water utility company will likely be your only option for water, and your rental unit will already have water connections and shut-off valves that you should become familiar with.

Sewage

Without a sewage utility set up, running water alone doesn’t do you a ton of good. Your sewage bill is often paid to the same water utility, or to a city service, and is necessary for you to be able to flush your toilets.

Waste Disposal

No matter where your rental property is located, you’ll need some way to dispose of trash. Some cities provide their own trash removal to residents, but in many places it’s up to the property owner or tenant to set up trash removal services with third-party companies like Waste Management or Republic Services.

If your rental unit is a condo or apartment located in a larger complex, trash removal may be included as part of an HOA fee.

Providing recycling pickup is as necessary as trash removal. Many waste removal services pick up trash on a weekly schedule, and provide a separate schedule for the pickup of recyclable waste.

Heating

If you’re located in warm climates like Florida or California then it’s possible that your rental unit won’t need or have heating. For those in Minnesota or Illinois, however, heat is essential for surviving brutally cold winters.

Heat is generally provided by a furnace that either runs on natural gas, electricity, or by burning wood. Many energy utility companies provide natural gas as well as electricity, meaning that your monthly electricity and gas costs would show up on the same utility bill.

Internet

In the modern world, internet is as essential for daily life as the above services, and many people would also consider their internet connection to be a utility. 

Unlike variable bills like electricity and water, internet bills are typically a flat fee each month, and the service agreement will give some kind of expectation of internet speeds.

Phone

Long ago, before everyone carried smartphones in their pockets, landline phone service was also considered an essential utility. Now that everyone has their own cell phone service that bills them monthly, phones are no longer considered a home utility.

What is a Utility Bill?

All of your rental unit’s utilities are billed on a monthly basis. The utility bill is the invoice to show how much of the service you’ve used in the billing period, how much money is due, and when the amount must be paid. If you’re late to pay a utility bill, you risk having the utility disconnected and your service discontinued. 

Can Utilities Hurt Your Credit?

Your credit history is key to getting low interest rates on things like mortgages and car loans, and when you’re late on recurring monthly payments, it can result in a lower credit score.

Most utility companies do not report payments to credit bureaus, meaning utility bills do not typically have an impact on credit scores. That being said, you should always make sure to pay all bills on time every month to ensure that you don’t wake up to find the water shut off or the electricity switched off.

Should You Include Utilities in Rent?

One of the eternal questions in the world of rental properties is whether utilities are included in the monthly rent. In most cases, it’s entirely the landlord’s decision on whether or not they include utilities in the rent, and if so, which ones.

Utilities Are Not Included in Rent 

If the landlord decides not to include any utilities in the rent amount, then the renter must set up all utilities and be responsible for paying them each month. This decision makes sense for landlords already offering a low rate compared to their local market value, and it keeps bills simple with the same rent amount due each month.

Utilities Are Included in Rent

On the other hand, many landlords choose to include some if not all utilities in the rent price. This makes sense if the property owner is in a highly competitive market or wants to charge a premium rental rate. This is also a great option if the rental unit sees new tenants often, such as with month-to-month or short-term leases, so that utilities aren’t constantly changing names for the property.

If a landlord does decide to include utilities in the rent each month, they typically will only include a few essentials, such as electricity and water. They may also specify some limits for heating and cooling so that they’re not hit with extravagant bills during extreme weather.

How to Lower Your Utility Costs

Utility bills can become eye-wateringly expensive, and you never want to be surprised by your utility costs. Here are some ways to keep costs down.

Keep Reasonable Temperatures

By far the biggest contributor to high utility bills is the cost of heating and cooling a rental unit. If you live in an area that gets very hot or very cold, you know that heating and AC are vital for being comfortable.

“Comfort” is defined differently by each person, but in general you can save a lot of money by not overheating or overcooling your rental unit. According to energy.gov, you “can save as much as 10% a year on heating and cooling by simply turning your thermostat back 7°-10°F for 8 hours a day from its normal setting.” This can be during working hours, or other times that you aren’t even home.

By keeping your rental unit between 70 and 78 degrees year round, you can save a lot on your utility bills.

Change Light Bulbs

You’ve likely heard that older bulbs are really inefficient, but consider this: LED light bulbs use less than 25% of the energy of incandescent bulbs. By changing all the bulbs in your rental unit to LED bulbs, you can save a lot of energy on lighting.

Add Insulation

Insulation is the fluffy stuff (usually pink) in your walls and ceiling that keeps your home cooler in the summer and hotter in the winter. Having more of it is always a great idea, and old insulation can break down over time. Most homes don’t have as much as they really need, so it’s a great thing for any property owner to look into.

Some experts say that a poorly insulated house could save $2,000 in annual energy costs after being insulated property.

Use Less Water

You may heard that many parts of America are running out of water. This will likely lead to higher water utility bills in the decades to come. Here are some ways you can save on water bills:

  • Take fewer showers. If all you did was sit at your computer all day, you probably aren’t in dire need of a daily wash.
  • Install water-smart appliances. From toilets to shower heads and faucets, there are a plethora of water-efficient appliances that save both water and your money.
  • Cut back on sprinklers. Irrigation is a huge waste of water, and many people in dry climates are realizing that their pristine green yard doesn’t make a lot of sense when their area is under a persistent drought. 

Explore Green Energy

Many energy companies provide subsidies and programs that make it easy for you to take part in cheaper green energy. Furthermore, solar energy is consistently coming down in price and can replace your entire electric bill if installed correctly.

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