Landlords deny tenants' right to switch

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

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. In addition, 40% wrongly state it’s because they have included a ‘preferred supplier’ clause in their tenancy agreements. 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. 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.

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. Over three quarters (79%) of renters didn’t receive any information on how to switch supplier at the start of their tenancy – and six in ten (60%) say landlords should provide more information about managing utilities when moving in.

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

• 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
• 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
• 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
• 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
• 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.”