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Essential Electricity Tariffs Recommendations for Landlords

As a landlord, you have two main options when it comes to the energy bills in your properties – you can make it the responsibility of tenants to choose the tariffs and pay the bills, or do so on their behalf and get business electricity price comparisons. If you choose the latter, you can then incorporate the costs in the rent – or charge tenants separately.

In addition to the bills, you should also consider how to manage the energy within your property – namely deciding on the type of meter that’s installed and the extent of any energy efficiency measures you’d like to take. The following is an outline of these options and how they can affect you and your tenants.

Prepayment meter versus credit meter

In contrast to credit meters where users receive a monthly or quarterly bill to pay for energy they have already used, prepayment meters require users to top-up the meter in advance, so they can only use energy if they’ve already paid for it. Many landlords use prepayment meters as a way of guarding against the risk of tenants moving out with debts still on the energy bill.

While a prepayment meter can seem like the best option for you, it is important to consider that it is also one of the most expensive ways to pay for energy – your tenants will not be able to take advantage of suppliers’ cheapest deals, and will be paying a lot more than they would with a standard credit meter. It would be in the interest of your tenant for you to install a credit meter at your property.

When working out how much to charge your tenant for energy, you have a legal obligation to not charge them above the maximum resale price. In short, your tenant should never pay more to you than you would pay the supplier. If your property involves multiple individual tenants, you’ll need to figure out how to charge each tenant fairly and proportionally for their energy. You’ll need to keep these calculations up to date and ready to show your tenant if they ask for it.

Option three gives your tenant the responsibility to manage their energy themselves, including comparing and switching suppliers if they wish to. Like many landlords, you may wish to include a clause in your tenancy agreement that the tenant must notify you if they intend to switch electricity tariffs or suppliers. If you have established a relationship or tie-in with a specific supplier, you’ll need to specify this – and give your tenant the details of your arrangement.electricity meter

Whichever option you choose, you can help ensure your tenants do not pay for previous tenants’ energy usage by taking meter readings – specifically as soon as the previous tenant moves out, and as soon as the new one moves in. Give these readings to each tenant to minimize any disagreements about energy usage.

If you’ve opted for your tenant to be responsible for the energy bills, it’ll help your tenant if you send the readings to the supplier along with details of the change of tenancy. The supplier can then make sure they are charging the correct tenant for energy at the property.

Energy efficiency for landlords

You’ll also need to think about energy efficiency measures at your rental property as this can help keep tenants’ energy bills down and reduce carbon emissions at the property. Further benefits of making energy-efficiency changes could include:

  • Raising the value of your property and increasing its appeal to prospective tenants.
  • Due to lower bills, tenants are less likely to go into rent arrears or fuel poverty.
  • Lower turnover of tenants.
  • Less risk of condensation and damp at the property.
  • Reduced need for repairs (for example burst pipes in cold weather).
  • Higher Energy Performance Certificate (EPC) ratings which might make your property easier to let.

Under the Energy Act, from April 2016, you would not be able to refuse a tenant’s reasonable request for energy efficiency improvements at their home, as long as a financial package is available for that improvement. Typical requests include:

  • Loft and cavity wall insulation
  • Solid wall insulation
  • Upgrading boiler/heating controls
  • Draught proofing
  • Double/triple glazing
  • Financial support for landlords

There is a variety of help and support available to landlords at Energy Advice Line who want to improve the energy efficiency of their properties or install renewable technology. Some avenues you could explore include:

Green Deal

This scheme allows you to cover the cost of installing energy efficiency measures through savings on your electricity bill. The scheme applies to the electricity meter at the property, which means if your current tenant moves out the next tenant will continue the repayments.

You’ll need to get permission from your tenant before signing up a property to a Green Deal plan, as well as permission from your next tenant before they move in. Likewise, if your tenant wishes to sign up to the Green Deal, they’ll need to get your permission, but whoever is agreeing to the deal they need to do a domestic or business electricity comparison to check they are getting the best rates and the green energy split they want.

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