Utility Cap – tenancies from August 2023
Since our last update, there have been further developments in the rapid increase of utility costs, and some degree of concern within the HMO/Student Home sector as there were concerns these rises would be unchecked.
During her brief tenure as The Prime Minster, the Rt Hon Elizabeth Truss MP stepped in and introduced a cap on utility costs. Just before her exit from Number 10 this cap was time limited to April 2023. This introduces some certainty for this tenancy for the next 5 months however does not address the certainty for the upcoming student year starting August 2023 – The government led by the Rt Hon Rishi Sunak MP has not announced any plans to extend the utility cap past April 2023.
It should be noted these caps are on the cost you will pay for each unit of electricity and gas and the standing charge – they are not a cap on your total bill.
This short term cap until April 2023 is a fairly substantial increase of 20% (approx) on electricity and 43% (approx) on gas compared to the prior cap.
For tenancies starting July or August 2023, we will be introducing a new cap that is tied to the OFGEM cap and won’t refer to a specific value of cost. This contract cap will be incremented by 10% for each additional bedroom above 3 beds. Note that the overspend allowance DOES NOT broadband and DOES NOT include water costs, as these can be variable and even different between two identical houses.
Studios up to 3 beds: Ofgem Cap (for average house)
4 beds: Ofgem Cap (for average house) + 10%
5 beds: Ofgem Cap (for average house) + 20%
6 beds: Ofgem Cap (for average house) + 30%
We also understand that any inclusive contract be fair to both sides, so will be looking at rent increases to reflect the additional costs of running a property during this cost of living crisis. There is expected to be across the board increases for all properties to let in Liverpool (and generally across the country) – this is not only due to the utility costs but also due to rising mortgage rates. As a long term solution to rising utility cost, a rethink of the basis for charging is needed – we will possibly be looking at a total usage approach (number of KWh used both in electric and gas) and any overcharge at the landlords billable rate.
Thinking of swapping suppliers?
You can seek advice on changing suppliers to get a better rate from the Martin Lewis website MoneySavingExpert.
How do we manage this?
We rely on you to let us know if there has been an overspend situation. If you do pick up high usage, we can verify it with our online calculator. We will need recent copies of bills so any overspend can be recovered at the correct usage rate.
We will be publishing a separate blog about utility overspends for 2022 tenancies now that we have firm information about government assistance for heating costs.
If you have any questions please do not hesitate to let us know!
Simon and the Topproperty Team.