Your energy bills could still rise even if they are included in your rent

Renters who have bills included will not be insulated from the energy crisis – but landlords and letting agents have been warned against hiking up rents to cover surging bills. 

The 54 per cent increase in the energy price cap has seen households facing rising bills and inclusive rent properties popular with student house shares, homes in multiple occupancy (HMO) and build-to-rent properties are likely to see their rent rise.

Last month Labour MP Steve McCabe asked housing minister Eddie Hughes to lay out the Westminster government’s assessment of whether landlords and letting agents had the “potential capacity” to increase rent mid-tenancy to claw back cash lost to higher energy bills.

The minister’s answer pointed to the maximum resale price which applies when energy bills are in the freeholder’s name and a leaseholder buys their gas and electricity from them. A landlord or letting agent can face civil proceedings if they overcharge when recovering the cost of energy bills.

Hughes said: “Where the landlord is responsible for paying the energy supplier and bills the tenant separately to rent, the landlord can only charge for the ‘maximum resale price’ which includes the energy the tenant has used, the tenant’s share of the standing charge, and the VAT owed.”

However there is no such protection from the energy crisis for renters who pay their rent and bills as one payment.

Guidance from the energy regulator Ofgem said the maximum resale price does not apply when an inclusive charge is made for accommodation.

That leaves people who pay for their rent and utilities in one payment at risk of surging rent and the issue is set to hit students who are already feeling the squeeze.

Ahead of the Spring Statement, just over half of those with a student loan or bursary told the National Union of Students that they did not believe the money was enough to meet costs of living.

Three quarters said they are worried about managing finances and a quarter said they have less than £50 to live off a month after rent and energy bills.

Any increase in those costs is likely to drive more students to food banks – with five per cent telling NUS they are already relying on them to stave off hunger.

“Students are already under extreme financial pressure,” a NUS spokesperson told The Big Issue. “It is simply not right that whilst fossil fuel companies are making billions of pounds, thousands of students are accessing food banks and more than two in three are concerned about getting by financially. We need a new vision for education, starting with a return to maintenance grants and bringing them in line with a real living student wage.

“They must redress exploitative housing costs, introduce a student rent cap and move towards the student movement’s vision of a fully funded education system before more students are priced out of education. The chancellor would do well to remember that the cost of living crisis affects students too.”

Jasmine Milton, a physics student at the University of Portsmouth, told The Big Issue her landlord had changed the terms of her rent from £360 per calendar month including bills to paying the same amount and covering bills separately.

The 24-year-old said the chance would have a huge impact on her budget as well as her mental health. 

“I anticipated a change but I’ve been unhappy with the decision to keep the rent the same price whilst removing the bills and I don’t see a need for it other than greed,” said Milton, who is from Telford in Shropshire.

“I am disabled and rely on student finance for funding so I’m used to budgeting, but it’ll be really difficult to budget even more. When I’m low on cash the first things that get hit are my shopping budget and my travel money, which is money I set aside to go home and see family. Telford also has the Telford Food Bank which I’ll be utilising more going forward when I can get home. I suffer badly with mental health so going home is important.”

Milton told The Big Issue that her university offers a £750 bursary to students on low incomes as well as an emergency fund to help students in desperate financial situations.

But she was looking to sell some of her possessions to get by.

“In the last week I’ve been going through all of my belongings and setting aside things I can sell to help towards the new price increase,” Milton added. Some of it I don’t use like old clothes, however some of it like my Celestron Telescopes and expensive DSLR camera that I do use often will need to be sold as they’ll make the easiest money.

She added: “So many students in the UK have committed suicide over the pandemic due to financial reasons as well as loneliness, and i’m sad to say I don’t see things getting better, only worse.”

Students might not be able to access support that has already been offered to help with the energy crisis either.

With students exempt from council tax, most will not see any benefit from the £150 rebate Chancellor Rishi Sunak announced to deal with the rising cost of living.

But the £200 reduction in energy bills is unlikely to filter down to students who have bills included either – even though many will have to pay the cash back on top of bills in future. 

Save the Student’s (STS) National Accommodation Survey found 92 per cent of students living in uni halls have bills included as do 86 per cent of students living in private halls and around half have water, electricity, gas and broadband prices included in rent.

Overall, STS estimated that current undergraduate students will end up paying around £60m more than they’ll save through the Energy Bills Support Scheme.

Jake Butler, STS’s money expert, said: In the case of the £200 rebate, it’s actually likely many will end up paying it back over the next five years despite never having the advantage of the saving in the first place. How can that be fair?”

What support is available if you can’t cover your rent and bills?

While Sunak faced criticism for his lack of action over the energy crisis at the Spring Statement, junior minister Hughes laid out the government’s approach in his answer to McCabe.

He said: “In February 2022 the government announced a £9.1 billion energy bills rebate package, worth up to £350 each for around 28 million households. Domestic energy customers in Great Britain will receive a £200 reduction in energy bills this autumn, which will be paid back automatically over the next five years.”

For people who don’t pay council tax or that pay council tax for properties in Bands E-H there is also a discretionary funding of £144 million available to help vulnerable people and those on low incomes cover costs.

The £500m Household Support Fund is also available from local authorities across England, Scotland, Wales and Northern Ireland to help households meet costs around clothing, utilities and food.

Students are likely to be locked out of other support for covering energy bills. The Winter Fuel Payment offers up to £300 to help pensioners with energy bills while the Cold Weather Payment and Warm Home Discount are available to people who claim certain benefits.