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.
In this series of articles, we will 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.
Why did you fit prepay electric meters in your HMOs?
About 25 years ago I started fitting prepay meters. The reason for this was to stop tenants abusing the supply of free, inclusive electricity. I found that by fitting prepay meters in the HMO’s the electric used decreased by up to 50%. Tenants’ behaviour changed overnight. Before fitting prepay meters, when I went into any of my HMOs, many of the tenants would leave everything in their rooms switched on. After prepay meters were fitted, they would leave nothing switched on.
There is also the benefit of increasing the income from the HMO. I find that the meters not only reduced the cost of electric, but their income from the prepaid meters substantially reduced (and can even eliminate) the cost of providing electricity. It should also be appreciated that by reducing energy usage, you are doing your bit towards saving the planet.
Why are you changing to Metro Prepaid electric sub meters?
I have recently started to fit Metro Prepaid meters because they are cheap compared to conventional prepay meters and very convenient for our tenants to use. Tenants can top up their meters online, by phone or from shops that offer PayPoint facilities. They also provide us with a monthly account of payments made.
So far, apart from running extension leads to the communal supplies, we have not found any way staff or tenants can defraud us using Metro Prepaid electric sub meters. The meters are largely tamperproof. With the card meters, cash is often involved, if card meter cards go missing and the cards can be sourced from other suppliers. I have even had an ex-employee selling electric cards to my tenants at a discount. The downside is that the Metro Prepaid meters take 9.55%+VAT for managing the account and payment takes up to a month to be made.
Are properties with prepay electric meters harder to let?
I find my tenants prefer not to have prepay electric meters fitted into their rooms. They would rather pay me £10 a week more in rent. We all have ideas, concepts or beliefs in our head which are difficult to shift. I probably more than most. I would ask you to reconsider your outright rejection of prepay meters. I have no vested interest in this apart from I fit and have fitted prepaid meters for almost 20 years. I get no money out of promoting prepay meters. No one is giving me commission for promoting their meters.
What I do is share with other landlords my experience which is that the cost of electricity to the landlord almost halves when prepay meter when prepay meters are fitted to each tenant’s room. Why? Because tenants change their behaviour, the tenant is now directly paying for the electric they use. Instead of many tenants leaving everything switched on, everything is switched off in their room. It stops tenants
abusing the free supply of electric and you are also doing your bit to save the planet.
The greenest energy is the energy not used. I introduced prepay meters to stop tenants leaving electric heaters running 24/7 in their rooms and leaving windows wide open because, as one said to me, “They like fresh air and they also like to be warm!”. I was not initially interested in the income obtained from prepay meters and I would give away the electric cards almost like confetti. (I now use online methods of payment with prepay meters I use which makes the administration and collecting payment much easier). I was just happy to save about 50% on my electric bill.
The massive increase in electric prices has changed things. Landlords have found their electric bills have increased from about 15p per kilowatt to 75p kilowatt. An increase of five times! I calculate the average tenant’s electric usage will increase by £10 per week. This means that a six-bedroom HMO will cost at least £60 a week more to operate just on the electric never mind the gas!
NB from observation I find there is little variation in the utility costs between a three room and eight room HMO. This could be rationalised on the basis that a 3 or 8 room property may not vary that much in size, so the number of occupants makes little difference. The other issue I have is utility costs can vary enormously between HMOs, I can find little consistency, only an average.
I note you mention that your tenants would rather pay £10 a week more in rent than to have prepay electric meters. I agree, I calculate the average tenant’s electric cost will increase by about £10 per week. This increase in cost will destroy many HMO businesses unless something is done to control the cost. On top of this is the massive increase in gas prices. To cover the increased cost in gas and electric I guess estimates that the landlord will have to charge their tenants and extra £20 a week.
If the tenants are prepared to pay this then all is well and good. My experience is that few tenants will or can pay and I find using prepay meters the best alternative. The use of prepay meters as i mentioned above is also environmentally beneficial and more fairly distributes the cost of electric between the tenants who use it and those who do not.
I have 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.