Building operators face an ongoing balancing act in trying to meet net zero and utility cost targets without infringing on individual choice or negatively impacting the resident experience. This means that all-inclusive rent offerings may need to be addressed in order to remain viable for operators.
The existence of all-inclusive rent models is acknowledged as one of the barriers to achieving net zero in the residential sector, as residents have no financial repercussions for excess water and electricity consumption. In fact, research highlights that residents who have electricity included in rentals may use up to 35% more electricity than those in accommodation where utilities are billed separately.
All-inclusive rents are a key selling point for property operators and in the PBSA sector in particular, all-inclusive rents are highly valued by students, with evidence suggesting that up to 70% of students consider all-inclusive rent to be an important factor when choosing where to live.
Changing Behaviours
In the Changing Behaviours report, we spoke to residents and operators of PBSA about their thoughts and experiences with all-inclusive rents and how that impacts on their sustainability efforts. The conversations we had with residents suggest that the existence of all-inclusive rents may mean that they receive conflicting messages around energy and water consumption, causing some doubt over whether sustainability goals are genuine. One international student, living in PBSA in Dublin said:
“The first day that I moved in, I was asking about certain things, like leaving lights on. And the woman who was showing me around, she said, you don’t have to pay anything else for the rest of the year. Just do whatever you want. And that type of attitude contributed to the way that I took showers or left things plugged in. Taking long showers is one thing that I feel like I’ve had the liberty to do because I didn’t have to pay the water bill.”
An obvious solution would be to unbundle utility bills from rental prices, however many providers are reluctant to do this at the moment for fear of losing a competitive advantage. Another option is to implement a fair usage policy, seen by many as a middle-ground solution, but the reality is that many properties do not have the smart metering or reporting capabilities which enables them to quantify energy usage at the individual unit level.
Fair usage
Anecdotal evidence suggests that some properties advertise a fair usage policy, but operators are reluctant to charge for excess consumption based on a method of dividing floor or building level meter data by the number of apartments or individuals. There is recognition that this approach may penalise residents who do not consume in excess and can give an inaccurate picture of individual use. It also misses the opportunity to target outliers, which can include up to 40% of occupants. Again, this is something that smart metering could address.
There are some indications that the conversation around a more targeted approach using individual metering may be revisited sooner rather than later though, as more companies chart their path to net zero. One PBSA provider said:
“We’re doing a lot of these trajectories to net zero audits ... those audits will almost certainly recommend local individual level meters for electricity, water and heat.”
The issue of all-inclusive rents aside, property managers also face challenges in trying to achieve the right balance in terms of encouraging rather than coercing pro-environmental behaviours, while being respectful of the fact that residents are young adults who are paying to rent their accommodation. Another PBSA provider said:
“This is a student’s home. This is where they’re paying to live […] They’re not in their childhood home where they’re being told, ‘Do this, do that.’ And we are keen not to have that sort of parent-child relationship.”
While reducing energy consumption is the major priority for property owners, reducing water consumption and waste are also key concerns and areas where operators are keen to bring residents along on the sustainability journey with them:
“It’s about reducing shower times. It’s about not leaving taps running ... but it’s also things like reporting faults. So, if there’s a toilet cistern leaking into the pan, it’s not causing any problems from the student perspective ... but that can be wasting literally hundreds of pounds worth of water every year, thousands and thousands and thousands of litres of water for the sake of someone coming and doing a 10-minute repair job that costs a few pounds. So, it’s also about helping to raise awareness of what students should be doing to help us.”
Tackling the problem
There is often a gap between what we would ideally like people to be doing (or what they might intend to do) and what they actually do. The Changing Behaviours report looks at the reasons why certain behaviours are being exhbited and the ways that operators can use behavioural models to address some of the obstacles preventing both operators and residents from making the necessary changes to their behaviour to reduce utility usage and improve overall sustainability.
