The Energy Bills Support Scheme was implemented by the UK government in 2022 and granted the majority of households in England, Scotland, and Wales £400 to help with their energy bills.
This runs concurrently with the Energy Price Guarantee, which began on 1st October, 2022, and ends on 1st April, 2024. The Energy Price Guarantee, essentially substitutes for the Ofgem price cap, which determines the maximum price providers may charge homes for a single unit of gas and electricity.
The UK Government announced on 27th February, 2023, that an additional 900,000 homes in Great Britain and Northern Ireland would receive assistance through the Alternative Funding for the Energy Bills Support Scheme and the Alternative Funding for Alternative Fuel Payments.
The deadline for applicants who qualify for the money is 31st May, 2023.
For those who don’t have a household electrical supply and didn’t receive the automatic £400 payment, there is the Energy Bills Assistance Scheme Alternative Funding. If you reside in Northern Ireland, things are slightly different.
The Alternative Fuel Payments Alternative Fund will also pay those who heat their houses with alternative fuels other than petrol.
Three different sorts of support are offered.
In Great Britain (England, Scotland and Wales):
Seraph Property Management Director, Douglas Haig, wrote to Jo Stevens MP to address the confusion surrounding UK subsidies for energy bills that are included in rent payments, particularly since the implementation to the tenant fee ban under an amendment to the Renting Homes (Wales) Act. Clarification was sought on who should receive the subsidy as there was conflicting guidance – the tenant or landlord?
For about 90% of lettings where tenants are responsible for their own bills, they will receive payments through the proposed channel. If a landlord has sub account metres and pays the main bill, they can adjust the metre to reflect the price increase in October. However, they cannot make a profit from reselling the service and may need to reduce or refund the amount of the increase to comply with Ofgem requirements, this would allow the tenant to avoid the increase to the degree of the EBSS.
In the scenario where a landlord has a fixed rent including bills, tenants are already protected from bill increases as they are paying a fixed rent. In this case, the landlord may retain any excess funds, as they are the ones who would be out of pocket to cover the increase in the bill due this autumn.
However, a landlord includes an amount for utilities in the rent, and the amount is exceeded due to increased usage or prices, the tenant is liable for the increase. In this case, the increase should be reduced by the £400 received, as the tenant carries the risk of the increase.
The statement below is included in the government press release:
“This also applies to students and other tenants renting properties with domestic electricity contracts from landlords where fixed energy costs are included in their rental charges. In these circumstances, landlords who resell energy to their tenants should pass the discounted payments on appropriately, in line with Ofgem rules to protect tenants.”
The Ofgem rule states that landlords cannot make a profit from reselling. If the landlord is liable for the increase, they should keep the EBSS, but if the tenant is liable, they should benefit, which aligns with the Ofgem rule.
The problem is that the EBSS explainer document states that:
“landlords with a domestic electricity connection who charge ‘all inclusive’ rent, such as the case for many student houses, where a fixed cost for energy costs are included in their rental charges, should also be passing on the discounted payments to tenants”.
The problem identified is that the second document is inconsistent with the previous one and fails to recognise the Ofgem rule. There is a question of whether tenants who are not liable for increasing costs need to be protected from rising costs they are not experiencing?
Douglas Haig requested clarification on the two department policies and suggested that whoever is liable for increased charges in the autumn should keep the refund to soften the blow of expected large increases. The Ofgem rule can remain, and any surplus would be refunded from the landlord on the rent-including bills system. However, it is unlikely that there will be a surplus as the average bill is expected to increase from under £2,000 to about £3,500, which is roughly double the subsidy.
The response to the above states:
If customers pay for their electricity as part of their rent, the information reads:
“Your landlord may charge an all-inclusive rent, which includes a fixed cost for your energy usage. They should agree a discount with you in line with your tenancy agreement”
You may not get the full amount of support – for example, if the fixed cost already protects you from the energy price increase.
Your landlord must however pass on some or all of the support they get from any of the following schemes:
They should give you a fair and reasonable amount and must not make a profit. This is called the ‘pass-through requirement’ for energy price support.
They should do this as soon as they can. You should not need to do anything to get this support.
Your landlord must tell you in writing within 30 days of getting the support:
We hope this has provided you with clarification on what to do if you are a landlord with bills included rental properties and have received the £400 energy support scheme grant. If you wish to discuss this further, please reach out to our property management team.