Press release:

UK landlords add over £161 million to tenants’ energy bills by denying their right to switch

  • More than one in ten (13%) landlords admit denying private tenants their right to switch energy supplier[1], adding at least £161 million to renters’ bills[2]
  • A fifth (19%) of landlords with three or more properties have prevented a tenant from switching[3]
  • Over a third (36%) of landlords incorrectly believe naming a ‘preferred supplier’ in rental agreements means they can stop renters switching[4]
  • Landlords also cite a high turnover of tenants and even late rental payments as excuses to stop tenants changing energy provider
  • 230,000 renters (5%) who haven’t switched said it was because their tenancy agreement prohibits it[5]
  • uSwitch.com is calling for an urgent review of misleading contract terms and improved training for landlords to help tenants reduce sky-high energy bills.

UK landlords are adding at least £161 million to private renters’ energy bills by barring them from changing supplier, according to new research from uSwitch.com, the independent price comparison and switching service.

The figures reveal that more than one in ten (13%) landlords admit to unfairly preventing a tenant from switching energy supplier[1] – rising to a fifth (19%) among landlords who let three or more properties[3].

Ofgem, the energy regulator, states that renters who are responsible for paying their energy bills are allowed to switch supplier and that landlords and letting agents cannot unreasonably prevent them from doing so. A ‘preferred supplier’ clause can be used in rental agreements, but tenants are under no obligation to use the named provider.

The new research indicates high levels of confusion amongst landlords about renters’ rights. Despite the rules in place, more than four in ten (43%) landlords who bar their tenants from switching say it’s because the supplier is the choice of the landlord[6]. In addition, 40% wrongly state it’s because they have included a ‘preferred supplier’ clause in their tenancy agreements[7]. The ‘preferred supplier’ has led to confusion amongst tenants themselves, with almost four in ten (39%) incorrectly believing it means they must remain with the specified supplier[8]. Around 5% of renters – the equivalent of 230,000 – who haven’t switched supplier at their current address say it is because their tenancy agreement expressly prohibits it[2].

Shockingly, a significant proportion of landlords are blaming a high turnover of tenants and even late rental payments as excuses to stop tenants switching to cheaper energy deals.

Despite the double whammy of rising rent and bills, Ofgem suggests that tenants are half as likely to switch to cheaper energy deals than homeowners. Today’s uSwitch.com report also reveals that more than one in five (23%) mistakenly believe tenants are unable to switch supplier when they like[9]. Over three quarters (79%) of renters didn’t receive any information on how to switch supplier at the start of their tenancy[10] – and six in ten (60%) say landlords should provide more information about managing utilities when moving in[11].

The study marks the launch of a manifesto from uSwitch.com to help ‘Generation Rent’ save money on their energy bills. It calls for:

  1. The Competition and Markets Authority (CMA), as part of its ongoing energy market investigation, to look at ways of tackling confusing contract terms relating to energy switching in tenancy agreements. For example, reviewing the preferred supplier clauses that many landlords are using to prevent tenants from exercising their right to switch
  1. The CMA to mandate the inclusion of a simple, standard clause in tenancy agreements which states that tenants who pay for their energy directly have the right to switch energy supplier
  1. Landlords and lettings agents, in the meantime, to cease the use of unfair clauses in tenancy agreements which state that tenants cannot switch supplier when the renter has responsibility for paying the energy bill
  1. Landlords and lettings agents to inform tenants at the start of each tenancy about how to switch along with details of where to find and access their energy meters
  1. The National Landlords’ Association to include basic training for landlords about helping tenants manage their utility bills, including a tenant’s right to switch, as part of its Landlords Accreditation Scheme.

Ann Robinson, Director of Consumer Policy at uSwitch.com, says: “Landlords who unfairly refuse tenants their right to switch are standing in the way of more affordable energy for millions of homes.

“With a £339 difference between the average standard tariff and the cheapest deal, there has never been a more important time to help the growing population of renters tackle the sky-high cost of energy. Given that tenants are half as likely to switch as homeowners, any measures to break down the barriers and encourage them to take more control of their energy will reduce bills by millions.

“It’s time to stop landlords pulling the wool over renters’ eyes. We are calling for an urgent review of misleading terms in tenancy agreements, better training for landlords and more information for tenants about their rights. Energy switching should not be out of reach for the people who need it the most.”

Dan Wilson Craw, Policy Manager at Generation Rent, says: “When a tenant pays the bills, their energy supply is not the landlord’s to decide. Arrangements between landlords or letting agents and preferred suppliers are unlikely to result in a good deal for the person who ends up paying. Renters should research what savings they could make by using a different supplier and should not be afraid to switch.”

— ends —

Notes to editors

Research was conducted by Opinium between 2nd and 7th September 2015, amongst a nationally representative sample of 500 private landlords and 1,000 private tenants in the UK. 

  1. When asked ‘have you ever prevented a tenant from switching energy supplier (where energy bills weren’t included as part of the tenant’s rent)?’ 13% of respondents answered yes.
  2. Calculation based on the number of UK landlords being 1.87 million and the number prevented from switching being 244,000. Average number of properties per landlord questioned has been considered and we assume that if a landlord has prevented at least one energy switch and has more than one property, they have prevented at least one switch per property. Cheapest deal on the market as of 21/09/15 is GB Energy Supply ‘Premium Energy Saver’ at £831 per year, based on average dual fuel energy consumption. Average big six standard variable tariff (payment on receipt of bill) is £1,170 per year = £339
  3. When asked ‘have you ever prevented a tenant from switching energy supplier (where energy bills weren’t included as part of the tenant’s rent)?’ 19% of respondents with 3 or more properties answered yes.
  4. When asked ‘in which of the following circumstances do you believe landlords can prevent tenants from switching energy supplier?’ 36% of respondents selected ‘If a preferred supplier is stipulated in the tenancy agreement’.
  5. Calculated by x 2.56% of tenants selecting this option which equates to 230,315 tenants based on 9 million in the UK (Source: Shelter, 2015).
  6. When asked ‘what were your reasons for preventing a tenant from switching an energy supplier’, 43% of respondents answered ‘the energy supplier is the choice of the landlord’.
  7. When asked ‘what were your reasons for preventing a tenant from switching an energy supplier’, 43% of respondents answered ‘I have a preferred supplier which is stipulated in tenancy agreements’.
  8. When asked to select true or false, 39% of respondents incorrectly selected ‘Tenants are not allowed to switch energy supplier if their landlord/letting agent names a preferred supplier in a tenancy agreement’.
  9. When asked to select true or false, 23% of respondents incorrectly selected ‘if energy bills aren’t paid for by the landlord, tenants are allowed to switch energy supplier as often as they like during a tenancy’.
  10. When asked ‘did your landlord/letting agent give you information on how to switch energy provider at the start of your tenancy?’, 79% of respondents answered ‘no’.
  11. When asked ‘do you think landlords/letting agents should provide information on how to manage utility contracts and how to save money on energy bills when a new tenant moves in?’, 60% of respondents answered ‘yes’.

About us

Launched in September 2000, uSwitch is an online and telephone price comparison and switching service, helping consumers get a better deal on gas, electricity, broadband, TV services, mobiles and personal finance products including mortgages, credit cards, car and home insurance. Last year we saved UK consumers over £278 million on their energy bills alone.

Customers can sign up to an account that automatically monitors the energy market and notifies them when they can move to a cheaper tariff, while broadband customers can conduct a speed test to find out how fast their broadband is and identify the best deal for their postcode.

The multi award-winning 'Switching Made Simple' app allows customers to compare energy, broadband, credit card, mobile and SIM-only deals – and uSwitch also has a UK contact centre manned by energy and broadband experts. Customers can post their latest energy bills to FREEPOST USWITCH to receive a free call back and be guided through the comparison process, or they can email customerservices@uswitch.com with their postcode and usage details.

uSwitch is owned by ZPG, which operates some of the UK’s most trusted digital brands that help empower smarter property and household decisions including Zoopla, Money, PrimeLocation and SmartNewHomes.

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