It is important for landlords to note they have specific obligations to their tenants. You are legally responsible to keep a property that you rent either commercially or domestically safe, ensure all gas and electrical equipment are properly installed, maintained and certified and determine how the energy bills will be paid.
How to manage energy for tenants as a landlord
When you rent out a property, you can agree in the tenancy agreement whether you or your tenants will be responsible for paying the energy bills for the property.
If you decide to be responsible for paying the energy bills, you will be responsible for deciding who the energy supplier will be for the property and can ask your tenants to pay you directly.
This gives you the flexibility to switch landlord energy supplier to the best value gas and electricity tariffs available. This also applies if you are renting out a commercial property, you can switch business energy if you are a landlord that is responsible for paying the bills. We also recommend you compare other business utilities to ensure you are not overpaying.
If you opt for your tenants to pay the energy bills directly, tenants have the right to switch to a new energy provider if they wish, but will need to inform you of their intentions, you should state this in the tenancy agreement so they understand their obligations.
It is recommended that you ask your tenants to contact the energy provider for your property and have the bills put into their name and ask to see the bill to be sure this has been done.
Different Energy Meter options for landlords
One of the decisions you need to make as a landlord is which meter to have installed in your rental property.
Many residential landlords install prepayment meters as tenants pay for the electricity and gas they will use in advance and it reduces the likelihood of being left with unpaid bills. However, the unit rate of energy is very high for tenants which can be off-putting.
Credit meters are the most cost-effective option for your tenants as they allow them to take advantage of the cheapest available tariffs, including fixed rate energy tariffs, and pay a set amount of money per month or quarter.
A smart meter gives the same benefits as a credit meter, but do not require meter readings to be taken manually as they automatically read the meter and provide the data to your energy provider.
Half Hourly Meters
Designed for large commercial usage, half hourly meters are a specific type of meter that take automatic readings every 30 minutes so that your supplier can split your business energy consumption into half hourly blocks to ensure accurate meter readings and being collated.
Energy Saving Advice for Landlords
There is now legislation in place which commits landlords to providing a minimum standard for domestic property and commercial property energy efficiency and it is the legal obligation of all landlords to comply. In fact, take a look at our guide on Minimum Energy Efficiency Standards for Landlords to find out more information.
There are a number of cost-effective ways you can ensure you abide by government legislation, reduce your energy bills and reduce carbon emissions. We recommend landlords explore home insulation as this yields benefits not just in reduced energy prices but also in ensuring your house is not effected by damp and mould which can be costly to fix.
For commercial landlords or tenants, there are many ways to cut business electricity costs within commercial buildings, especially as business property rents have continued to rise over the past few years. As a landlord, the investment in new technologies, such as electric vehicle charging points, may allow your investment in energy to become an income generator at the same time.
Energy management for HMO properties
For landlords letting HMO properties, the same broad rules apply. Many HMO landlords may prefer to maintain responsibility for paying the energy bills for the property as it can be complicated to arrange individual agreements with tenants for their bills.
That means that you are in a good position to switch your landlord energy supplier to a supplier that provides the best value for money. Providing your tenants with low overhead costs increases your competitiveness and makes it easier to secure occupants for HMO properties who often want the cheapest deal possible.
How to manage gas & electricity supply as a commercial landlord
Landlords of commercial properties have broadly the same legal standards to follow as domestic landlords, responsibility for Energy Performance Certificates and the maintenance and safety of energy and water systems are almost always within the landlord’s remit.
As a commercial landlord you can opt to pay the energy bills for your property yourself and therefore can compare business energy that meets your needs.
If you agree in your tenancy agreement that the business renting your property is responsible for the energy bills, they can switch energy provider if they wish to do so.
How to manage energy supply at the start or end of a tenancy
Whether you have decided to be responsible for paying the energy bills for your property or you have given your tenants responsibility to do so; when tenants leave your rental property or moving house there are a few things you should definitely do.
Ensure you are there with your tenants to take a meter reading on the date that they move out of the property to make sure you can verify how much energy they used during the tenancy should there be a dispute later on. Give your tenant notice to inform the energy supplier that they are moving out.
For specific information about business energy, please take a look at our comprehensive change of tenancy guide for commercial properties.
Landlord Energy Advice FAQs
If I rent out a property who is responsible for paying the energy bills, me or my tenant?
It depends, but as the landlord it is up to you, you must state in the tenancy agreement if you will be responsible for paying the bills or your tenant.
Can I switch energy supplier on behalf of my tenant?
If you are responsible for paying the bills, yes. If your tenants are paying the bills they are entitled to switch supplier but they need to inform you that they intend to do so.
What type of meter should I use for my business or home rental?
It depends on the needs of your business, many landlords prefer a prepayment meter but this is expensive for tenants and can be off-putting.