UPDATE: Your guide to the energy price guarantee and equivalent business support
The existing energy price guarantee has been extended for a further three months, until June 2023, helping save the typical household £160.
In advance of the Spring Budget 2023, the government announced that it will extend its energy price guarantee for a further three months, until June 2023. This will hold energy costs at £2,500 per year for the average UK household
This extension will help cover around £160 of energy bill costs for the average household from April until June, when the prices are expected to dip.
What's covered in this article?
- What energy cost support is currently in place for UK households?
- How are energy prices expected to change in 2023?
- Will landlords need to pass on the £400 energy payment to their tenants?
- How will the government help support businesses?
- Which businesses will be eligible for the energy bill discount?
- What resources are available to support my tenants or those struggling to pay their bills?
- Should my landlord still offer a "bills included" option?
- Is now the right time to make energy improvements?
- How can I help my landlords manage their void periods during the energy crisis?
What energy cost support is currently in place for UK households?
The energy price guarantee means that restrictions are currently in place to limit the amount that a unit of energy costs. The typical household will therefore pay approximately £2,500 on average from 1 October 2022 until June 2023, under the guarantee.
Households that don't pay directly for their gas or electricity or aren't connected to the mains will receive support from a separate fund.
The government will also end the premium paid on energy costs by households on prepayment meters - saving four million families £45 a year from July onwards.
This is on top of the financial support already available for the winter months, the previously announced £400 Energy Bills Support Scheme payment for all households, and the additional support available for vulnerable and low-income individuals.
You can read more about this financial support in our guide, to ensure your tenants understand what they may be able to access.
How are energy prices expected to change in 2023?
In February, Ofgem also announced a new energy price cap to come into play between 1 April to 30 June 2023. The cap will drop by around £1,000 to the annual level of £3,280 - although households won't directly see this difference, as the government's price guarantee will continue to limit the amount consumers pay per unit of energy.
Cornwall Insight data then predicts that the Ofgem price cap will sit at an estimated £2,100 a year for a typical household from July.
Will landlords need to pass on the previously announced £400 energy payment to their tenants?
The government has announced legislation to ensure that landlords pass the £400 Energy Bills Support Scheme (EBSS) payment on to their tenants, if the tenancy is on a bills-inclusive basis.
Chris Norris, the the National Residential Landlords Association's Policy Director, says: “Given payments under the support scheme have not begun to be made, the government’s plans to legislate are premature and are demonising landlords unnecessarily.
"It sends a dangerous and misleading message that landlords cannot be trusted to do the right thing, creating needless fear and anxiety for tenants."
How will the government help support businesses?
The government is also supporting businesses during the cost of living crisis with the Energy Bill Relief Scheme, a discount on gas and electricity unit prices.
The government has set a "Supported Wholesale Price" at a rate of less than half the expected wholesale winter prices - £211 per MWh for electricity and £75 per MWh for gas.
The support will be automatically applied to bills, and the discount will apply between 1 October 2022 and 31 March 2023, with savings first seen in October bills.
However, between April 2023 and April 2024, the price threshold will increase to £302 per MWH for electricity, and £107 per MWh for gas, for most businesses, under the Energy Bills Discount Scheme (EBDS).
Which businesses will be eligible for the energy bill discount?
The scheme is available to non-domestic energy customers in Great Britain including businesses, voluntary sector organisations, and public sector organisations. These groups will also need to be on:
- an existing fixed-price contract, agreed on or after 1 December 2021
- deemed or out of contract or standard variable tariffs
- flexible purchase or similar contracts
Businesses signing a new fixed-price contract during the scheme will also be eligible.
What resources are available to support my tenants or those struggling to pay their bills?
There are sites helping tenants to find ways to become more energy efficient in homes, and you can also ensure that they're aware of the financial support available, if they struggle to pay their energy bills, especially during the winter months.
If the increase in energy prices has an impact on your tenants' ability to pay rent, after advising them on the financial support available you should consider implementing a payment plan to tide the tenant over until the summer months when they will be using less energy.
For instances where mutually agreeing to a payment plan doesn't work, offering your landlords a rent protection option can help to give them more peace of mind that they can continue to receive their income, even if their tenants are unable to pay their rent.
Should my landlord still offer a "bills included" option?
If your landlords offer bills included but have not yet fixed their properties' energy prices, they may well find themselves trapped between the rising cost of gas, electricity in the house and their ability - or inability - to increase the rent to cover that.
Tenants may be willing to pay more with one packaged payment to ensure they have some certainty in their monthly expenditures.
You can help your landlords ensure they're appropriately balancing the costs that they're expected to pay with the money that they earn.
Is now the right time to make energy improvements?
Energy efficiency is already high on the government's agenda, with its Net Zero by 2050 target and the recent announcement of its strategy to move away from carbon-based forms of energy production, towards heat pumps and other solutions.
Proposals to increase minimum energy efficiency standards mean that landlords will need to invest to increase their Energy Performance Certificate ratings to minimum rating of C on all new and existing tenancies by 2028.
Energy efficiency improvements are both investment in your landlord's asset - the property - as well as the ongoing yield from rental payments, which will likely pay dividends when it comes to selling or continuing to rent in the future.
Taking a step by step approach can help spread the cost of making these improvements.
How can I help my landlords manage their void periods during the energy crisis?
During the void period, you need to make sure that your agency and its landlords know who is paying the bills.
Taking accurate metre readings is essential, so your landlord only pays for the energy they use.
This can also help avoid receiving bill estimates which assume the property is occupied and therefore more energy is being consumed.
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