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 second 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 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.
Will electric sub meters cause tenants to leave?
What I have found is in my area, if you do something different then people do not respond well to it. I have not had anyone refuse to take a room because it had an electric sub meter fitted, but then they may not approach me if they know I have prepay meters. I have a 30 room HMO all metered without any issues and in good demand. The main advantage of fitting electric prepay meters is not the income, but it reduces the electric bill for the landlord to the property by nearly 50%. Tenants behaviour changes instead of leaving everything switched on, they switch everything off.
Will I no longer have to pay for electricity when electric sub meters are fitted?
It does not mean you have to stop paying for electricity supplied to the HMO. The landlord pays for the electric into the property and this bill must be paid. Income from the prepaid meters will be added to the income produced by the property, like additional rent or having an extra room.
You will still be paying for the electricity in the communal areas but the cost of electricity will be offset by the income produced by the meters. We install the prepay meter in each lettable room and the tenant pays for the electric in their own room. By law, landlords are not allowed to make a profit on the resale of electric used by the tenant but can recover the cost of electric, standing charges and any administration costs.
For 30 years I have analysed the electric, gas and water usage in my HMOs and the income from prepay electric meters and I find enormous variability, for which I am unable to identify the cause. Some properties use a lot more electricity or produce more income from prepay meters than others for no identifiable reason.
Is it legal for Landlords to fit electric sub meters?
The fitting of electric sub meters or prepay meters is perfectly legal. I and other landlords have been doing it for decades. What a landlord cannot do is advertise their HMO as being fully inclusive when the tenant has to pay for the electric or heating. I get around this by advertising ‘most bills are included’.
The only restriction on charging for electric is that you are not allowed to make a profit out of the resale of electric, though you are allowed to recover all costs. The recovery of all costs is rather vague and could be interpreted to mean you could include a contribution towards the
cost of installing and maintaining the meters and the cost of communal electricity.
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.