Utility increases

Energy prices have risen massively over the last few months for a variety of reasons, this does effect those tenants who have bills included tenancies which have not yet started.

This blog applies only to tenants who have signed bills inclusive tenancies with Purple Frog, where we are the managing agent. If you will be paying your rent directly to your landlord, you should contact them using the contact information on your tenancy agreement to discuss the bills element of your rent.

Landlords and agents set advertised rents at the start of the letting season (normally Oct/Nov), and limits on fair usage based on utility rates at that point. Normally there are not significant changes to utility rates between then and the start of the tenancies in the following summer; this year however has been very different.

Allowing unlimited usage of gas and electricity could end up costing landlords much more than the amounts tenants have paid, in addition to encouraging excess energy use which is bad for the environment which is why most bills included packages have fair usage policies limiting the cost of energy consumed.

Fair usage allowances are set in £’s and vary by the number of occupants in a property.

The consequence of the increase in utility rates means that, using average energy use rates from our properties and the new utility rates we have secured, each tenant is likely to overuse their energy throughout a 12 month tenancy and have a bill of approximately £500 to pay.

We negotiated provisional energy rates back in November 2021 with our energy suppliers, but left the option to secure rates closer to the time of tenancies starting in the hope that energy rates would return to normal; unfortunately, due to the war in Ukraine, prices have only gone up, but, we have still been able to secure the rates negotiated in November, which are significantly lower than anything currently available on the market today.

The rates we have secured are11.5p per kwh for gas with a 45p per day standing charge, and 29p per kwh for electricity with a 45p standing charge.

The below table is a comparison of other providers based on expected average usage.

Options

We are providing a number of options to our tenants who have bills inclusive contracts:

Option 1

To carry on with the existing terms of their contract, with the knowledge they may end up with an additional bill for over usage at the end. Provided tenants send meter readings to us, we will update them throughout the year with their energy usage.

Option 2

To increase weekly utility payments by approximately 40%, in return, the additional amounts paid will be added to the fair usage limits.

Option 3

Where possible (some utility contracts are already in place and some buildings can only be let with bills included), we have offered to remove the energy proportion of the rent and reduce the rent by the same amount so that tenants can secure and manage their own utility contracts.

FAQ’s

What about the £400 refund the Government have announced?

At the time of writing, the information provided by the Chancellor about the £400 refund on bills is sparse and we do not yet know if it will apply to properties where bills are included with the rent, BUT, we will be working hard to claim this on your behalf if at all possible, and if secured, the amount will be added on to the fair usage limits. We will update our tenants as soon as we have more information.

What do I need to do?

If you have a bills inclusive contact with a property managed by Purple Frog we have emailed you with your options. Please discuss with your housemates what you’d like to do (you each need to select the same option), reply to the email and we’ll get everything sorted for you. You must let us know before the end of 1st June 2022 what you’d like to do.

Will I have to sign something?

If you select option 2 or 3, we will send out new documents to sign to confirm the arrangement, if you have a guarantor, they will need to re-sign the agreement also.

Why was this not discussed earlier?

It is always a difficult decision to decide when to lock in utility rates with suppliers, especially with fluctuating rates. Back in late 2021 there was a sharp increase in energy rates with the potential that they could come down again before summer 2022, unfortunately, the war in Ukraine has meant this hasn’t been the case. We have been fortunate to be able to use the energy rates we negotiated back in November 2021.

What do I do if I want to add on a bills inclusive package?

We have secured great utility rates (compared to the market), and they are fixed for the whole of your tenancy; if you’d like to take advantage of this rate, please get in touch with ops@purplefrogproperty.com and we will provide you with a quote for a bills inclusive package.