Energy for Commercial Landlords
Many landlords prefer to avoid the expense and hassle of managing their tenant’s energy contracts. But there are some excellent reasons you might want to provide your tenants with a contract or manage it for them. If you need access to better deals on energy suppliers or conditions for tenants with large energy requirements, you may want to do this.
Landlords may also offer energy plans to tenants, which provide them with a fixed rate for a period. This way, there is no cost or risk when dealing with suppliers, and you can take advantage of better deals. Themes such as sustainability, cheaper rates and discounts for more extended contracts may attract tenants to enter into these types of agreements.
Why is it so important to choose the right supplier for your energy as a commercial landlord?
It’s essential to choose a supplier carefully. While your tenants may have the option of choosing a new supplier whenever they want, you won’t be able to change suppliers as often as they do efficiently. It may be tempting to go with the cheapest option, but as well as finding a good deal for your tenants, there are many other factors you need to think about.
For example, long-term costs are essential for tenants as it can be difficult to move if the landlord’s contract with the energy supplier is up, or on some contracts, you can be legally bound to an energy supply for a certain period. So choosing suitable suppliers will help your tenants save on energy bills and make more informed decisions about their energy use.
Advantages of Providing Energy for Commercial Landlords
One distinct advantage of providing an energy contract for tenants is accessing data and energy management. Energy management using a contract could help you save money because it gives you access to better deals, although you could still end up paying more than your tenant. Other benefits of energy management are that:
- It’s easy to interact with the energy company; you can check and amend bills and payments, and so can your tenants.
- It’s quick and straightforward to manage energy usage. If the contract utilises a variable rate paid by the occupant, that will be naturally reflected in their bill.
- Your tenants are likely to have access to better rates. If you manage your tenant’s energy contract, you will have access to better deals on energy suppliers. However, it is essential to find out whether your tenant is paying more or less than they would be otherwise because this might affect the savings for your property.
- You will not have any additional fees involved with applying for a lease renewal or changing a tenant’s supplier.
What should you consider when choosing an energy provider?
The choice of energy supplier is influenced by the type of property and the size and electricity usage of the tenant. The market is competitive, so it’s essential to find a supplier that offers good value for money and can provide a well-priced contract with a good level of customer service. The main criteria for choosing an energy supplier include:
- Long-term value: fair and transparent pricing with no hidden charges.
- Customer service: the energy supplier should provide you support and advice on issues such as default payments and boiler maintenance.
- Provision of information: the energy supplier should provide details of its products and services, as well as a retainer agreement, which will allow you to check that you’re on a fixed-rate contract.
Contracts are generally long term, so if you are contractually obliged to pay a fixed bill even in the absence of occupancy, it may be a good idea to have a clause that prevents tenants from leaving the contract without a penalty. Fixed contracts are advisable for a landlord expecting rising energy prices. Locking in a fixed rate can lead to savings for tenants in the long term.
It is increasingly becoming important for both tenants and landlords to choose a supplier that has strong links with renewable energy or does its part for the environment by supporting community projects and developing green technologies. You can ask for more information on these green energy contracts by getting in touch with the supplier.
Doing research can be time-consuming. Therefore, to reduce the amount of time spent on this, information is now available from government agencies such as Ofgem and Ofwat. You can also use a broker or letting agent help facilitate the negotiation and contract terms.
Energy suppliers that charge per kWh may seek to vary this rate between tenants; a variable tariff can make it difficult for landlords to predict how much they will pay each year. The current retail energy supply market enables renters to switch providers easily but usually ask for long-term commitment – especially for commercial landlords.
Energy Performance Certificates (EPCs) are a mandatory requirement for both commercial and residential properties. EPCs are carried out by Energy Performance Certificate Providers, accredited by Ofgem, who then provide you with an EPC. The EPC gives you a report on the energy efficiency of your property, where it ranks against other similar properties in your area. This information can help make decisions around managing energy usage.
You may also want to consider providing your tenants with home solar panels or heating systems. This will save them money on their energy costs and help you to meet environmental targets.
There are a number of benefits to being a landlord with a renewable energy scheme:
- Your tenants will have access to a scheme that they can’t always get from their utility provider.
- You can provide them with more reliable and better deals for either the generation of their own energy or from your scheme.
- You can meet environmental targets and reduce your carbon footprint by offering your tenants this option.
You can read more about energy for landlords here.
Other useful links about Business Energy
EDF Business Energy
Deemed Rate Energy Contracts
What is an Energy Performance Certificate
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