Electric sub meters are popular in HMO buildings as a way to accurately track individual energy usage and allocate costs fairly. However, while these landlord meters can bring many benefits, they can also pose challenges for owners and tenants alike.
This is the third part of a series of articles where we continue to explore the experiences of Jim Haliburton, known as HMO Daddy, who installed Metro Prepaid electric sub meters in his properties, sharing insights and lessons learned along the way. He is an experienced HMO landlord with over 100 HMOs and 1000 tenants.
These questions and answers are taken from his booklet called HMO PREPAY METERS: Everything You Want and Need To Know About Fitting Prepay Meters in HMOs.
What can you charge for electricity when using electric sub meters?
With prepay meters, you set the charges as you wish but by law you are not allowed to make a profit. For fairness, I keep the charge for electric at less than the highest tariffs being offered by suppliers, which is currently over 50p per kilowatt (January 2023). The lowest charge is about 20p per kilowatt but there are high standing charges at the cheapest rates, so it makes the actual cost of electricity per kilowatt difficult to calculate.
I know electricity companies are not allowed to turn off the supply of electric to residential occupiers. Would using an electric sub meter be seen as disconnecting the supply for a tenant, if they are unable to pay?
If a tenant fails to maintain sufficient credit on the sub meter, then they effectively disconnect themselves and this is permissible. Landlords are not permitted to disconnect a tenant, for example, cutting the supply to the room or property if the tenant does not pay their rent even if the utilities are included. I appreciate it is a subtle distinction and the effect is the same as the tenant no longer has electricity, but one way is legal the other is not. What utility companies are allowed to do but a landlord CANNOT do is to fit prepay meters and recover outstanding debt by charging an amount every week. Utility companies can in my experience charge as much as £20 per week to recover utility debts.
A landlord CANNOT also recover any rent arrears via an electric prepay meter. The only way rent arrears can be recovered is through the courts if the tenant refuses to pay. See my manual ‘DIY Eviction’ only available from HMO Daddy via www. hmodaddy.com for more information on how to legally, quickly, simply and cheaply evict a tenant.
When fitting a electric sub meters, it is expected that tenants will have a given amount of electricity per month, or do they pay for all the electric they use?
We usually get the tenant to pay for all electric and no allowance is given. It is only when we introduce meters to an existing tenant who objects that we give anything. One of the ways of persuading them to allow a sub meter to be fitted is to give them a one off credit of £20 to start with. With new tenants, no allowance is usually given unless we house contractors and their company is paying, in which case we keep their meters topped up. Another way to persuade an existing tenant to allow a meter to be fitted is to give them a choice of £10-£20 a week rent increase or have a meter fitted. They always opt for having a meter fitted.
How do tenants pay when a Metro Prepaid meter is fitted? Can this be done at the meter, online, or do they need to approach the landlord?
The big advantage of fitting Metro Prepaid electric meters over other brands is the administration of selling electricity is done by Metro Prepaid meters. The tenant can pay online, direct to Metro Prepaid meters or go to any PayPoint outlet. Metro Prepaid meters do all the administration by sending the landlord a monthly account, a month in arrears, which shows each individual meter in the property and what has been paid by the tenant.
Jim Haliburton has written a book on fitting prepay meters in HMOs entitled, “Everything you Need to Know About Fitting Prepay Meters in HMOs”. It can be obtained as a free download or as a paid for book only at www.hmodaddy.com.
Jim Haliburton, known as HMO Daddy, is not an electrician, energy conservation expert, lawyer or financial advisor, nor does the following represent legal, financial or any other advice. If such advice is needed, then the reader should seek professional guidance from a qualified expert with appropriate public liability insurance. The following information is given to the best of Jim Haliburton’s knowledge and is provided for educational purposes only. It is the reader’s responsibility to obtain their own professional advice.