HMO bills included – Energy cost doubling and doubling again what are landlords allowed to do?

HMO bills included – Energy cost doubling and doubling again what are landlords allowed to do?

10:44 AM, 6th June 2022, About 2 months ago 13

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HMO properties are under rules from the councils such that HMO owners must include bills. With gas and electric bills doubling and doubling again, this makes most HMOs lossmaking.

You’re only allowed to increase rents for inflation once in a year …. but the bills component is not part of the rent, or is it?

What is the legal position?

Would it not be a great idea if HMO licence fees and council tax payable for HMO properties were waived/not charged – if not, councils face the situation that tenants could just be given notice to leave.

HMOs will go empty and be sold causing even less housing for the bottom of the ladder, young tenants and students which the economy needs.

Any thoughts or guidance?

 



Comments

Ian Narbeth View Profile

11:34 AM, 6th June 2022, About 2 months ago

I am afraid this has numerous mistakes.

"HMO properties are under rules from the councils such that HMO owners must include bills. "
Not true. Councils don't mandate this and with student lets utilities may be payable/recoverable from the students. With individual HMO tenancies, it is much more complicated and so most landlords don't charge separately.
"With gas and electric bills doubling and doubling again, this makes most HMOs lossmaking."
Not necessarily correct. Increased bills will reduce profits but should not make a property loss-making.

"You’re only allowed to increase rents for inflation once in a year …. but the bills component is not part of the rent, or is it?"
Not correct. You can increase to a market rent which is not the same as inflation. The Tenant Fees Act allows utilities to be charged for separately.

What is the legal position? See above.

Would it not be a great idea if HMO licence fees and council tax payable for HMO properties were waived/not charged – if not, councils face the situation that tenants could just be given notice to leave.
Not really. Councils need to fund their housing departments. Licence fees or Council Tax should not be the difference between a landlord staying in business or not unless his margins are tiny,

HMOs will go empty and be sold causing even less housing for the bottom of the ladder, young tenants and students which the economy needs. They won't be empty because of utility bills.

Robert M View Profile

12:21 PM, 6th June 2022, About 2 months ago

Great points made by Ian Narbeth in his reply to this post.

HMO's that are let with bills included will certainly find that their profit margins are reduced as the utility bills increase, and some HMO operators may decide to leave the market, but there will be other operators to meet the demand (perhaps buying the HMOs from those landlords that choose to leave the market?).

As new lets are agreed then the rents will increase to compensate for the increased energy prices, OR the letting strategy will change so that energy costs are charged for separately, e.g. using sub-meters.
For those that still include bills, and to limit usage/wastage in communal areas, then energy use controls, such as the tamper proof room stats offered by Inspire Home Automation, may become more commonplace, leading to greater energy efficiency. Landlords could also look at further measures to improve energy efficiency, such as additional insulation, as this would help keep the bills low for the landlord, and the tenant, as well as helping the environment.

Jo Westlake

14:14 PM, 6th June 2022, About 2 months ago

I'm using assorted techniques depending on tenant type and house type.
For student houses on joint tenancies I'm only including gas from September and have a fair usage clause. I will be handing out advice about ventilation and reminding student households the tax payer is giving them £400 towards their electric so don't be too frightened to use the tumble drier. I will also be installing more washing lines and wall mounted drying racks in bathrooms or utility rooms with extractor fans.

For other HMOs I haven't increased rents for existing tenants and have said if they can reduce wasteful usage I don't intend to do anything until at least October, hopefully beyond. New tenants pay whatever the market rent is when they move in.

In the meanwhile I have installed solar diverters to heat the hot water cylinders in any houses with solar panels and heat pump tumble driers in larger HMOs without solar panels.
I'm intending to put solar panels on at least 2 other HMOs and will be installing at least one of the HMO tamper proof heating controls as an experiment.

My tenants are mainly students or graduate professionals and most seem to be genuinely willing to engage with energy efficiency. One household has already told me they would be happy to contribute a bit more towards utility costs if it means I don't have to sell the house and make them homeless. It hadn't entered my head to sell up but I thought it was a lovely gesture that they offered and has made me have conversations to reassure other households.
Ultimately I have good tenants in my HMOs who pay their rent on time and look after the houses well. I may have a different attitude if they were in any way troublesome.

Mike

1:06 AM, 7th June 2022, About 2 months ago

I own a HMO, so that my tenants can live a life of luxury, I have to offset my bills by cutting down and making hundreds of sacrifices to reduce my electric and gas bills, my tenants will not wear 3 layers to keep warm, but I have to , my tenants will not cut down on lighting power, so I have to sacrifice my lighting down to 5 watt LED bulb from 180Watt chandelier, I have turned off my Sky box as it drew 20watts even when in standby, but my tenants cannot be asked to switch off from the plug, you just cannot dictate tenants how to live and make sacrifices as they don't pay any bills included in their rent. So their bills are included in their rents which is lower than the LHA, (See of you can find a double room for under £425.00 pcm including bills and council tax and minimum house temperature maintained at 22C throughout the year, so yes I got angry by having to sacrifice my energy bills which rose from £126 pm to £362 per month. and the bills in my 4 occupier HMO rose from £90pm to £262 pm.
Last time I increased rent was in 2019 October, from £400 pm per room to £425, now I have given them all a notice to leave or pay £450, so they stayed and have agreed to pay £450 pm, and I have written to them all that from October this year if the energy bills go stupidly higher yet again, they will have no choice but to leave or pay another £25 per month more, I am not damn paying my tenant's bills if energy prices go up beyond what I allocated within their rents.
Also remember when a tenant is going to claim housing benefit, they will require a statement from the landlord how much is being allocated towards bills and what is the actual rental element. They do not award any payments towards the element of energy bills.

Yes unfortunately our old age pensioners are struggling to keep warm by wearing 3 layers and wrapping themselves in blankets whilst their heating is turned off and my tenants are drinking beers and wines and walking in shorts and tee shirts like it is summer in the middle of Winter months, 4 occupants and 25000KWH gas and 2000KWH Electric

Mike

1:23 AM, 7th June 2022, About 2 months ago

BTW, two of my tenants have also purchased e-scooter, so I am paying for their transport charges as they plug in battery chargers, drawing a fair bit of energy to charge them up. I am thinking of putting in a large family with 4 occupants and they will have to pay CT, and energy bills and water charges. One tenant also uses my washing machine on hottest 90C wash cycle to wash his dirty work overalls. Everyone must be responsible for their energy bills, whether bills are included in rents so rent must go up regardless of anniversary, as my agreements state that clearly that my rent can be reviewed any time if cost of energy goes up, as well as it clearly states it is subject to a fair use policy, imagine if my tenants purchase an electric car! .

Mike

1:32 AM, 7th June 2022, About 2 months ago

Finally as I am on no benefits or pension, so I will not be getting the Governments hand out, my tennats were asking me what i would do if did get this £400, and I told them they won't be getting a penny of it as I have already been paying high energy charges since last October (2021) and I have only now put my rent up from April this year.

Lyn Te

18:19 PM, 7th June 2022, About 2 months ago

I had students who started as lodgers but then later turn into tenants, who were suppose to pay their share which they seem to think they dont have to pay in full and used £42 gas within 2 weeks but vehemently claimed they didnt use much gas electricity yet I fond them having electric heater in their room full blast on hot days. It was hot like a sauna despite not being winter. These Indian students thought so long as they deny usage they dont have to pay. They used over £1000 electricity within 6 months. They even refused to clean up after themselves telling me they are not going to clean my house.

So no, I didnt include utilities but they refused to put their name on utility Bill's and kept putting off payment. Felt they are going to do a runners.

Christopher Lee

22:40 PM, 7th June 2022, About 2 months ago

Issue a new agreement with a fair usage cap and also increase the rent. This has been going on long enough already so anyone who hasn't already addressed this is nuts.

Sam

10:12 AM, 10th June 2022, About 2 months ago

Reply to the comment left by Ian Narbeth at 06/06/2022 - 11:34
As usual a very fair and balanced comment by Ian, thank you .

Yvonne Francis

11:46 AM, 11th June 2022, About 2 months ago

Must say I have never comprehended why in shared tenancies in a HMO why the landlord opts for paying utility bills because at the end of the day the tenant will have to pay anyway. I have student HMO's and it's one of the things I fall out with accommodationforstudents.com, the online leading student accommodation site, as they encourage landlords to rent inclusively. I self manage my houses but one of my family has a student HMO with a very good agent who believes it does students good to learn about these things. All the agents in the student lets in my area as far know do the same.

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