Energy support: passing through the benefit to tenants

Introduction

In response to increased energy costs, the government has provided a number of different energy support mechanisms to help mitigate some of the rising costs on consumers.

In most cases, this energy support is paid directly to the tenant, as they are responsible for paying the energy bill directly. In some cases, the energy support is paid to the landlord however. For example, where the property is let out with bills-included the landlord would be the bill payer and would receive the energy support.

In response to concerns that landlords may not pass on the benefit of the energy support to their tenants, the Government has legislated to require that a 'reasonable and just' proportion of the energy support is passed through to the tenants. This may include reducing rent or cash transfers in cases where rents have risen to account for increased energy costs.

Downloadable factsheet

The NRLA has published the factsheet below to help you understand your requirements under this new legislation, as well as the types of energy support available should you wish to discuss this with your tenants. It provides a number of typical examples to help you work out what is a reasonable and fair proportion to pass on.

Who does the scheme apply to?

The scheme applies to any landlord acting as an intermediary between the energy supplier who provides the benefit and the tenants. If you are responsible for the energy bills on an all-inclusive rent, inclusive subject to a fair usage policy, or separately billing the tenants for their usage, then this scheme will apply.

What about heat network supplies?

If you are part of a heat network there are separate requirements that apply. However, currently there are some outstanding issues that the NRLA is seeking clarification on. We will will publish further information on heat network supplies once we have clarity on the points of concern.

What if I have not received any energy support?

If you do not pay the energy bills then you are not required to do anything under this legislation.

What are the pass through requirements in brief?

The legislation requires landlords to provide information to the tenants within a set time frame

Informing the tenants

Within 30 days of receiving the benefit of a relevant energy support scheme, or by November 30 if you have already received the benefit, you must contact your tenants and inform them of the following -

• how much benefit has been provided to you under the scheme
• how much will be passed through to the tenant
• if applicable, when and how this will be passed on
• if applicable, any steps the landlord is taking to correct an error in previously passed-through scheme benefit
• how end users can appeal to the landlord
• that if tenants do not receive the scheme benefit or disagree with the amount provided, then they may use civil proceedings to seek the money they believe they are entitled to

The Government has produced a sample letter for this available here.

Passing through the benefit

Once you have established what proportion of the benefit to pass on, then you should ensure this is passed on as soon as reasonably possible. The method of passing on the benefit can vary, with landlords able to pass on the requirements via -

• reducing the rent or direct debit charges
• cash payments
• adjusting the tariff on meters
• reducing outstanding debt

What is a reasonable and just proportion of the support to pass on?

This will depend on what the landlord has done to mitigate rising energy costs so far.

Where a landlord has not increased rents, absorbing the costs themselves, it would be reasonable to inform the tenants that the energy support benefit will be retained by the landlord in full.

Where a landlord has increased rents to account for the full extent of rising energy costs, or bills the tenant directly for usage, then passing on the full energy bill is expected.

Most landlords will be somewhere in the middle of these two examples though - partially absorbing higher costs but raising rents slightly to account for a proportion of the energy bill rises. In these cases, passing on a proportion of the energy support would be appropriate

What energy support schemes does this guidance apply to?

There are three different types of scheme that the energy passthrough requirements apply to.

GB Energy Bills Support Scheme (EBSS)

The Energy Bills Support Scheme provides a £400 non-repayable discount to eligible households to help with their energy bills over winter 2022 to 2023. This is to be paid in monthly instalments from October 2022 to March 2023.

Energy Price Guarantee (EPG)

The Energy Price Guarantee reduces the cost of gas and electricity to all households with standard domestic supply contracts and will be deducted from bills automatically.

Energy Bill Relief Scheme (EBRS)

The Energy Bill Relief Scheme will enable the government to provide financial assistance on energy bills for all eligible non-domestic customers, including businesses, charities and public sector organisations. This applies to energy use from 1 October 2022 for an initial period of 6 months.