The Energy Price Squeeze: What it Means for Landlords



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As energy prices continue to increase at a rapid rate, households across the UK are tightening their belts and considering their budgets. But what if you own multiple properties, all of which require gas and electricity? If your tenants are the ones paying the bills, then it won’t really affect your bottom line. However, if you’re a landlord with either vacant or all-inclusive properties, where the cost of gas and electricity is part of the rent, then the prospect of multiple price rises is daunting at best.

 

Of course, you can always pass the cost on to your tenants but, as rental prices also continue to rise, the squeeze on people’s bank accounts means you may end up losing tenants who are unable or unwilling to pay. It’s important that, when you take on new tenants, that they’re made aware of both the Standard Variable Tariff and the Fixed Rate, as well as being made aware that any extra usage above and beyond those rates will cost extra, so they can make an informed decision as how to best manage their costs. 

 

If your property is currently vacant, the costs are solely your responsibility until you find new tenants. Shopping around for a better rate and switching suppliers is no longer an option, as most companies are not taking new customers. You’re better off sticking with the rate you have, especially if you’re on a Fixed Rate or Standard Variable Tariff. And, if you’re currently on a Fixed Rate tariff with your energy supplier, it might be worth speaking to them and negotiating a continuation of that price over the next year or two. Prices are supposed to rise again in October so, if you negotiate to continue at a rate that’s higher than the current Standard Variable Tariff, yet lower than the rumoured SVT increase of 50%, it will save you money in the long run.

 

However, the fact is that prices are forecast to rise significantly over the next little while, and it most likely won’t be possible to escape some sort of increase. But another way to save is by making sure that your property is as energy-efficient as possible, therefore minimising the amount of energy used wherever possible. We’ve written posts before about different ways to save energy in the home and, while some items like not filling the kettle too much or taking shorter showers aren’t really going to be suitable in this instance, there are some things you can do within your property that will not only make it more energy efficient, but also more attractive to prospective tenants.

 

Insulation is one way to improve the energy efficiency of your property, as it keeps heat in during winter, yet can also keep things a bit cooler during summer. Insulating the walls and, if applicable, the roof cavity, is an easy way to make a difference. Ill-fitting windows and doors also allow heat to escape and are inefficient, so it may be time to look at upgrading the property to save you and your tenant money in the long run.

 

Making sure all electrics, gas connections and boilers are working properly is another thing to consider – not only from an energy-saving point of view, but also for the safety and wellbeing of your tenants and property. Reflector panels behind radiators stop heat being lost through walls, radiating it back into the room so that less energy is required to maintain a comfortable temperature. And of course there are alternative forms of energy to consider, such as solar, where you can actually make money by selling excess power generated back to the grid.

 

Of course, these options will involve some outlay of cash, and may not be possible depending on your situation. However, in light of the serious price increases being forecast, and the fact that most reasonable property expenses can be deducted from tax, it’s worth making the investment, for the sake of the planet, your property, your tenants and your bank account. Think about it.

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