The Pros and Cons of allowing tenants to change energy provider

As a landlord, there are many details to manage to ensure your investment is running as it should and generating the expected returns, while also providing your tenants with a habitable, safe and secure home. One of the last things on many landlords’ mind are energy suppliers and where everything is running well, changing that supplier is often a job they can’t face or don’t consider to be necessary.

A recent study from auto-energy switching provider Migrate, shows that some 32% of tenants have never switched energy provider. This means they could be missing out on savings of hundreds of pounds per year. But that’s not all the study uncovered. It also found that 67% of those who have never switched, assumed they weren’t allowed to do so because they were a tenant and not a home-owner.

Current regulations state that where a tenant is directly responsible for paying energy bills, they are entitled to switch that provider. If energy bills are included as part of the rent charged to a tenant, the choice of energy provider should be with the landlord.

Allowing your tenant to change energy provider

If your tenants are directly responsible for paying their energy bills to the energy supplier, then you should allow them the right to switch supplier, if they feel they can get a better deal elsewhere.

In theory, when a tenant manages the energy provider bills directly, the impact of allowing them to switch providers should be minimal. Of course, in some cases it could mean that a new smart meter may need to be installed in your property. That’s a detail you, as the property owner, should be made aware of.

Aside from that, however, the bills are in the tenant’s name and provided they pay their bills and everything is in order, including that your tenant informs you of the energy provider change, to keep your records up-to-date, then you’ll have a happy tenant and property that potentially boasts lower energy costs. That could prove a good selling point when its time to welcome a new tenant to the property.

Why you might prefer to manage energy providers yourself

Of course, not every tenant is perfect and where a change to an energy provider is made, some may forget or fail to update their landlord on this detail. This can lead to complications for the landlord, particularly when the existing tenant, who made the energy supplier change, leaves and a new tenant moves in.

If your records show incorrect details for the energy provider, it could lead to a period of non-payment which could result in additional charges for the tenant. While that would be unintentional on your part, it would also be no fault of the tenants.

If this is an issue you’d prefer to avoid, one option is to change your rent charging structure, from bills excluded, to energy bills included. You can then use the information for the account and your chosen energy provider to find a fair average energy usage charge to apply. And, if you see a better energy deal available, you must make the arrangements for that to happen.

Remember, though, that could include a visit from the current and/or new energy provider and that’s something you’ll have to notify your tenant of, where the energy meters are in the property they rent from you.

Whichever option you take, you should ensure your tenancy agreement includes specific details surrounding the change of energy providers; either that if the tenant opts for a new one, they must inform you and that where you change providers requiring any visits or work from the provider, you must inform them.

As with many elements of being a landlord, clear communication is key and if you have a good relationship with your tenant, energy provider changes shouldn’t be a problem for either party.