Energy rebate: tenants fear they could miss out on £400 discount

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When Rishi Sunak recently announced a £400 rebate on electricity bills for every household, there was one group of energy customers left wondering how they would get their money.

While customers who pay by direct debit or cheque will gain a credit on their electricity bills from October, and those with prepayment meters are expecting a voucher or credit, tenants who have meters in their rooms and pay a third party for their energy fear they will miss out.

One Guardian Money reader got in touch to tell us about his situation. He is one of several tenants living in a house of multiple occupation (HMO). They each have a prepayment meter in their room, and buy codes online from the company that runs it. That firm passes the money on to their landlord, who pays the energy supplier for the entire property’s electricity.

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The reader says he has a very good landlord and would not be surprised if his share of the £400 rebate was passed on to him and the others. But he wondered what the rules were.

“There are eight tenants in this house, all on prepayment meters. As I understand the situation, none of the tenants can receive the £400 grant, as none of us receive a bill from an energy supplier,” he wrote.

“I imagine this same situation applies to many thousands of tenants across the UK, and many, like me, will be people with very limited financial means.”

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Chris Norris, the director of policy at the National Residential Landlords Association (NRLA), says he expects landlords to get guidance from the Treasury about redistributing the money, but there are also protections in place for tenants.

“Landlords who are resellers of energy are not allowed to make a profit on that resale – they can be taken to the small claims court if they do,” he says.

He says landlords may reduce rents to funnel the money back to tenants, or distribute vouchers or cheques.

“If you have a good relationship with your landlord, I would suggest giving them a call and asking what they intend to do when the money comes through,” he says.

“If you haven’t got such a good relationship, you should keep an eye on the unit price you are paying, and log what you are spending.”

The unit price on a prepaid meter is decided by the landlord. If the price stays the same after October, and there is no sign of any other payment from your landlord, you should ask about the rebate, Norris says.

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Citizens Advice has information on its website about what landlords can and cannot charge for energy.

It makes clear your landlord can only charge you for gas or electricity if your tenancy agreement says they can, and they can’t charge you for energy if you pay your supplier directly.

The charity says your landlord can only charge you for the units of energy you have used, your share of the standing charge, and VAT. This is known as the maximum resale price, and your landlord can’t make you pay more than this.

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Any fee from the third party meter provider is likely to be charged directly when you top up.

However, the charity says there is no requirement for the landlord to pass the rebate on to tenants.

And it adds that in some cases the electricity supply to properties such as this will be on a non-domestic contract, in which case no rebate will be paid in the first place.

View image in fullscreenHouse or multiple occupation, or HMOs, often have individual pre-payment meters for each room. Photograph: John Giles/PA

When we asked Ofgem and the Treasury about the issue, we were told that consultations were ongoing about how the rebate would be managed, and that guidance should come in the summer.

There are about 500,000 HMOs in England and Wales, but it is not known how many tenants are paying for their energy through sub-meters.

Ofgem’s figures for prepayment customers do not include any of these sub-meters – they are just for households who have a direct relationship with an energy company.

Norris says he expects more landlords to move to third-party prepayment meters if energy prices continue to be subject to such big jumps because it is easier than trying to work out how much to include in tenants’ bills.

“Rather than having to set rents according to the October prices while not knowing what will happen next year, they could decide that maybe it’s fairer to try to find some kind of dynamic pricing, and the meters offer that,” he says.

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It was on 26 May that the chancellor announced a £15bn package of measures to help UK households deal with inflation. These include discounts on energy bills. The government had originally announced a £200 loan that would need to be paid back over five years. However, that idea has now been scrapped and replaced with a £400 discount or grant that will not need to be repaid.

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