Gas and electricity bills across the UK increased from October. So, what can you do?
Landlords with bigger properties are braced for a fresh wave of rental arrears as energy bills rise. From 1 October the new price cap means average energy bills will increase by 27% from £1,971 a year to £2,500
. It's a large price hike and many tenants and landlords are understandably worried.
There will be instances where all-inclusive rents have been set without reflecting the energy price increases. This means that landlords will ultimately be paying the cost of increased bills. That's why it's worth just checking whether you're charging the correct rent with a 60-second valuation
. Here's some more information about what landlords can expect in the coming months, as well as some tips on how to make your rental property more energy efficient and potentially save money.
Which types of landlords will be hardest hit?
The increase in energy bills affects each and everyone of us but there are some landlords who face tougher decisions than others – for example, buy-to-let investors who own HMOs and let on a room-by-room basis. They also tend to include energy bills and council tax within the price of the rent, and so face a difficult choice of whether to shoulder the costs or raise the monthly rent for their tenants. If you're in this position, it's always good to get an expert opinion from a local agent who knows the market. Or check the rent that you should be charging
online to give you an estimated figure.
Is this the final energy rise?
The regulator, Ofgem, has announced that energy price cap reviews will now be quarterly. The price cap increase just announced is very unlikely to be the last, with predictions that it will jump even higher in January and April 2023 for the average energy user.**
What can landlords do to mitigate the effect of rising bills?
If you’re a landlord of a HMO or numerous HMOs and you expect your energy bills to increase significantly, then you do have the option of increasing rents. A good agent can help with this and our lettings department has helped our landlords achieve a 10% increase in rental growth in just one year.*** This is one way of offsetting the rising costs.
Is there anything landlords can do to decrease the rising bills?
Energy efficiency is already high on the Government's agenda, and landlords are potentially going to have to comply with new EPC ratings set to come into play over the next few years. Savvy landlords should think about increasing their EPC ratings to a minimum rating of C on all new and existing tenancies by 2028, or sooner if possible. If you’d like to learn more about how you can make your rental property more energy efficient and potentially save money, we’ve created a guide to give you a starting point
What help is available?
There is help available. The Government is investing £12 billion in Help to Heat
schemes to make sure properties are warmer and cheaper to heat. There's also a Boiler Upgrade Scheme
which aims to provide grants to property owners to install low carbon heating systems such as heat pumps. All households will also benefit from £400 off energy bills during the winter months. This is an automatic discount and it will be applied in six instalments between October 2022 and March 2023. If you’re worried about how the energy bills increase could affect you, get in touch with us anytime. We also have an article on exactly how to insulate your property.
Will any discounts be applied?
From 1 October people will start to receive a £66 discount for October, another for November, and £67 for December, January, February and March. Some energy companies are directly applying these to bills, while others will credit the amount to customers' bank accounts. People on low incomes and pensioners on pension guarantee credit will get £140 off through the Warm Home Discount.
How will the winter market affect landlords and investors?
Although it may not feel like it currently, there's brilliant news on the horizon for landlords and investors. The capital growth that we've seen recently means that the money you’ve put into bricks and mortar is gaining in value. Rents have also increased dramatically since the start of the pandemic; they’re now above £1,000 a month, on average. Renters are paying £62 a month more than at the beginning of the pandemic****, according to Zoopla's Rental Market Report. Many investors are in fact undercharging for their area and property type. If you’re a landlord with a property to rent, it’s worth getting a fresh valuation as soon as you can, to ensure you're charging the correct rents over the winter months. It’s free and takes less than 60-seconds.