A few weeks ago, a large percentage of the UK received some extremely unwelcome news – energy provider SSE officially announced that they would be increasing the cost of gas and electricity, which led to other main providers, including British Gas, to do the same in quick succession.
For many, the timing couldn’t be worse, as we have already started to see the weather turn and everyone is starting to brace themselves for a long, cold winter.
Landlords need to be aware of how these price increases could also affect them; otherwise they could be left out in the cold.
What’s the situation?
Beside from the timing of the announcements, one of the main reasons that the public are so shocked by their energy providers’ decision is due to the amount they are increasing their tariffs by.
For example, British Gas will be increasing the cost of gas by 8.4% and the cost of electricity by a massive 10.4%.
Naturally, as many people are already struggling with bills, the huge difference in fuel costs will mean that many will now struggle to keep themselves warm during the winter.
It also means that even more people will soon fall into fuel poverty – when they have to spend at least 10% of their income on fuel.
How will this affect landlords?
Nearly all of your tenants will probably have a budget, which by sticking to they will be able to afford their rent, food, fuel and other expenses.
However, now that the cost of fuel is going to rise so dramatically, your tenants will have to completely rethink their budget, or if they fail to do so, they could start falling short on rent money.
There is already a huge amount of people in the UK that are currently in rent arrears, and this change in the cost of fuel is expected to lead to even more failing to pay their rent on time.
It may therefore be wise for landlords to invest in rent guarantee insurance, especially as Christmas is coming up, any lost income will make a huge difference.
How can landlords help their tenants?
Besides from investing in rent guarantee insurance, there are ways that you can help your tenants who may struggle with the more expensive fuel prices.
If you have tenants that are over the age of 60, or have young children living with them, you must make them a priority, as lack of heating during the winter months could affect their health.
To help reduce your tenants’ utility bills, you should ensure that your properties have insulation fitted, especially in the loft, as this is where most of the heat from a property escapes.
You should also make sure that there are no draughts in your properties, as these not only let warm air out, but also let cool air in. Draught excluders are extremely cheap to buy, and are therefore a cost effective way of reducing your tenants heating bills.
Should I switch my energy provider?
According to David Cameron, the amount that some energy providers are increasing their prices by is immoral, as it is well above the wholesale amounts.
At the moment, all of the Big Six energy companies, including British Gas, EDF Energy, Npower, E.ON, Scottish Power and SSE are increasing their prices over the next few months, however, there are those that have decided to buck the trend. Co-operative Energy and First Utility are both trying to look into alternatives, such as the Co-op only increasing their prices by the wholesale amount and First Utility putting off their price increases until spring.
This means that if you shop around, you may still be able to find a provider that can offer you relatively affordable prices. However, it looks like energy prices are set to increase across the board.
If you do decide to change your energy provider, make sure you do some research online, or advise your tenants on how they can do this themselves in order to reduce their utility bills.
Unfortunately, as the world’s reserves of fuel start to dwindle, the cost of energy will consequently increase, however, as a landlord, it is your responsibility to try and help your tenants as much as possible.
The Government is already looking at ways to reduce the cost of energy in the future, however, until then, it is essential that you put your own measures into place.