The cost of utilities for a rental home can vary greatly depending on certain factors like the size of the rental home and the terms of your lease agreement. It is important to have a clear understanding of what utilities you will be responsible for and an estimate of how much utilities cost each month in order to build a realistic rental budget. The general rule of thumb is to spend no more than 25% of your income on housing costs which include rent, utilities and any other fees like renters insurance.

What are average utility costs?

Before you can begin to estimate how much utilities cost each month, carefully review the rental ad or lease agreement to understand which utilities tenants you are responsible for. If you are unsure of any details, don’t be afraid to ask questions. If any utilities are included in the monthly rental price, it might be worth asking how the cost is calculated. For example, some living communities calculate utilities based on a shared water bill, which is important to consider if you are looking to have more control over your expenses.

• Electricity: Whether you’re renting an apartment or a single-family home, electricity is one of the most common utility bills tenants will pay each month. Your electricity cost is dependent on your local climate, the amount of energy you consume, the amount of appliances in your home and the rate per kilowatt hour (kWh) which varies by state and your electricity provider. The U.S. Energy Information Administration shows that the average monthly residential electric bill is about $115.

• Air conditioning: Similar to electricity, this expense will range depending on the size of your rental, location, climate and how often your A/C is on each day. Keep in mind that if you use an air conditioning unit during the summer months, it will contribute to your electricity expenses. If you live in a warm climate and use air conditioning regularly, cooling costs can account for up to 70% of your electricity bill.

• Heat: Does your rental home have electric or gas heat? This can have a significant impact on your heating costs each month. Your heating bill is likely to vary throughout the year depending on where you live – you can expect to pay little to no heating costs in the summer months. As it gets colder, it’s likely that roughly 50% of either your gas or electricity bill will come from heating costs.

•  Internet and cable: Today, the internet is one of the most important utilities for many tenants, especially for those of us working from home. One study found that the average cost of an internet package is between $50 and $60, but this often doesn’t include taxes or other fees. Internet pricing can vary based on speed and data, and it’s also important to consider any installation or activation costs if you are moving into a new home. Cable packages can range anywhere from $20 to over $100 per month depending on the channels you’re looking for. Most internet providers also provide cable services in bundled deals, which will cut costs if you plan on having both internet and cable. If you’re not going to use cable, you’re more than likely using streaming services so don’t forget to include them in your budget as well. Streaming services and tv network and premium channel apps range from $10 to $70 per month, and often people have more than one. 

• Water: Again, these expenses can vary dramatically depending on your location and how much water you use on a daily basis. It is more common for single-family homes to require that tenants pay for water, while many apartment complexes will cover the water bill or work the cost into the monthly rent payment. Move.org found that the average water bill in the U.S. is approximately $70 per month.

• Gas: Gas can be used for several functions in a single-family home like heating, hot water and cooking. The cost of natural gas varies by state, but the average monthly gas bill in the U.S. is between $60 and $70.

• Trash and recycling: Larger cities and towns usually provide trash collection for their residents. For other areas, you will need to find a trash collection provider. Recycling is usually free with your trash service, although some providers may require an additional fee. If trash and recycling aren’t included or paid for by your landlord, budget $10 to $40 per month for this utility (though it will vary based on city programs).

•  Renters insurance: Some lease agreements will require tenants to secure renters insurance. If yours doesn't, getting a policy is a smart, low-cost way to protect yourself and your possessions. Renters insurance policies can often be bundled with your car insurance depending on your provider, and typically range from $10 to $20 per month.

• Parking:  Generally, single-family homes have parking. You can either park in the garage or the driveway for no additional charge. However, some single family home neighborhoods only have on-street parking and require parking permits. This expense can vary greatly depending on location and city ordinances, and might range anywhere from $25 to $300 per month.

• Total costs: Typically, single-family homes generate higher costs when compared to apartments. It’s best to do your own research based on your specific lease agreement and rental location in order to get a realistic estimate of what you will spend on utilities each month. Tenants can spend from $200 to $400 total on utility expenses from month to month.

Utility costs landlords may cover

Landlords will either cover all utility costs or pass along all utility costs to the tenants in order to avoid any confusion. That being said, landlords are historically more likely to cover water, sewage and garbage costs while tenants are typically responsible for electricity, gas and internet/cable. Refer to your lease agreement for specific details. It should clearly define who is responsible for which utilities. However, many landlords have started offering internet and/or cable packages to attract tenants in a competitive rental market. 

How do I calculate utilities for a single-family rental?

Your first step is to create a complete list of the utility bills you will be responsible for as a tenant.  Determine which are absolute necessities (heat, electricity, etc.) and which are somewhat optional (internet). This is helpful if you’re working on a tight budget or if the utility costs are the deciding factor on  your ability to rent a specific home. Ask clarifying questions such as is the home heated with gas or electricity, and are utilities paid to the landlord or directly to the utility company before signing a lease agreement to make sure everyone is on the same page.

You probably won’t be able to know how much utilities cost exactly before moving in, but you should be able to come up with a pretty accurate estimate with a little research. Ask the landlord if they would be willing to share some previous utility bills with you, or reach out to utility companies directly to ask for average costs at the property address. Most will at least provide you with a high and a low. If you have any friends or family living in the area, ask if they would be willing to share their utility costs with you to get a sense of what’s reasonable in your location.

How to save money on utilities

Keep energy efficiency in mind when house hunting, as certain features that landlords have implemented will end up saving you money in the long run. For example, new insulation, double pane windows and energy-efficient appliances work together to help lower utility costs tremendously.

Heat efficiently

Heating an entire single-family home can quickly become one of your largest expenses if you aren’t careful. Turning the heat down when sleeping or when you’re not at home  can help you save significantly each month. If you live in an older home, consider insulated curtains or curtains made from a heavier fabric to trap in heat to reduce heating costs. Many ceiling fans have a switch that allows blades to spin clockwise, which will help push warm air that has risen to the ceiling back down into the room.

Avoid air conditioning units

If you live in a rather mild climate with a few days of extreme heat, you can probably get by without using an air conditioning unit and save money on your electricity bill each month. Use efficient cooling tips like keeping the lights off as often as possible, limiting the use of your stove and oven and opening the windows at night to cool down your home. Your landlord may have even invested in smart thermostats that use energy saving technology to help lower the cost of heating and cooling.

LED light bulbs

LED bulbs use 20% to 25% less energy than traditional light and can save you up to $500 a year on utility costs. They are also  90% more efficient at producing light compared to incandescent light bulbs. As an added bonus, LED bulbs don’t “burn out”. Instead, they slowly dim over time ultimately reducing the need to buy and replace bulbs as often.

Use less water

As you go about your day, pay attention to how much water you are using for simple tasks like brushing your teeth, washing dishes or showering. Making small changes to your routine such as taking shorter showers, turning off the faucet while brushing your teeth and only using the shortest cycle for your appliances (dishwasher, washing machine) can make a big difference over time. Consider investing in water saving tools like low flow shower heads and toilets.

Utilities should fit in the overall budget

Remember,  rent isn’t the only expense to account for in your budget. Utilities can encompass a large portion of your monthly housing expenses especially if you are renting a single-family home. Do your best to research how much utilities cost, then consider if these additional expenses are realistic for your budget before entering into a lease agreement to set yourself up for success.