Energy costs and rental markets

Many renters accrued arrears during the pandemic and now face further debt, as energy costs rise very substantially above pre-Covid-19 levels. Research suggests tenants are increasingly being asked to provide guarantors.

The government is keen to ensure the rental sector meets Minimum Energy Efficiency Standards, with landlords being obliged to increase their EPCs to a minimum of ‘C’ by 2025, but this does not address the rising cost of living, debt and poverty nor what happens to tenants falling into arrears.

The Energy Bill Relief Scheme (EBRS), reductions in National Insurance and plans to cut stamp duty do not alter the contractual arrangements between landlord and tenant or the obligation to pay rent. While landlords who receive rent inclusive of utilities will want to ensure tenants do not abuse this, they cannot expect tenants to foot the bills of an energy-inefficient property.

Landlords can still sue for arrears, but it is not difficult to predict that tenants will look to their statutory remedies to allege disrepair, inefficient properties and breach of some other statutory provision as a defence to a claim for rent arrears.

In addition to complying with their statutory obligations, landlords should look at ensuring their property is energy efficient. Together with the tenant, they can look at energy-saving tips, including sharing regular meter readings (or installing smart meters), so that tenants are aware of their expenditure.

Equally, tenants should be encouraged to co-operate by looking to reduce energy use. Consideration should be given to payment plans for those struggling and at the financial support available. Both should look to pass on the EBRS cap and explore emergency debt funds that many providers offer, as well as the various government benefit schemes that are available.

Above all, there needs to be a dialogue between landlord and tenant to ensure that both minimise energy cost and waste to navigate the crisis together.

Lara Nyman is a partner with the dispute resolution team at Seddons Solicitors