UPDATE: Your guide to the energy price guarantee and equivalent business support

13 January 2023

The energy price guarantee is currently in place until April 2024 - yet optimistic forecasts show that energy prices may fall faster than anticipated.

New forecasts show that energy bills could fall faster than previously predicted in 2023. As it stands, the energy price guarantee - which holds energy costs at £2,500 for the average UK household - will change after April 2023, jumping to approximately £3,000 for the average UK household, as shared in the Chancellor's 2022 Budget

What's covered in this article?

How are energy prices expected to change in 2023?

Finance company Investec has predicted that annual household bills could fall from July, meaning that the average household could pay £2,478 a year from that time.

Investec therefore anticipates that, if energy prices dip as it predicts, the energy price cap set by Ofgem would also fall, and the government's energy price guarantee would no longer be required.  

This contrasts with predictions from Cornwall Insight, which estimated that bills would sit at £2,800 on average over the summer. 

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 for from 1 October 2022 until March 2023, under the guarantee.

This will then increase to around £3,000 on average per household for the following 12 months, from April 2023.

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.

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.

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 a discount on gas and electricity unit prices - based on the energy price cap guarantee that domestic consumers will benefit from.

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. 

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. 

Download a free infosheet on the financial support available for your  landlords' EPC upgrades

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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Further reading