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 6th 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.
What is the cost and benefit of fitting electric sub meters to each HMO room compared with having the utility supplier fit a separate supply to each room?
If you wish to charge each tenant for the electric they use in their room, then you can fit electric sub meters which can be Metro Prepaid, credit, coin or card operated. The landlord pays for the supply to the house and resells the electric to the tenants by collecting the money from the electric sub meters if coin operated or by selling the tenant’s electric cards. This is the cheapest way of installing a prepay system but may have the hassle of emptying the coin meters and the security issues involved.
Card meters unlike coin meters do not often get broken into, but all electric meters can easily be bypassed. The tenants can use electric without paying for it and in effect putting the cost on to the landlord as the landlord is paying for the supply to the house. The cost of wiring up a room to use secondary meters depends on how it is done.
There are two ways of doing it:
1. The cheapest method is to spur off the existing circuit in the room, usually from an existing socket blanking off the existing sockets and add new sockets. This costs me in labour and materials about £160 plus the cost of the secondary meter which cost about £20 for a credit meter, £120 for a card meter, and coin meters cost slightly less than card meters. Then there is the cost of the cards for the card meters which are about 20p each.
Alternatively, as I am now doing, you can use Metro Prepaid electric sub meters which cost about £60 each. As Metro Prepaid electric meters are paid online, by phone or via Pay Point (a payment service) selling cards or emptying coin meters is eliminated.
2. To put each room on a separate circuit this involves fitting each room with a consumer unit and wiring back to a distribution board. The cost of this would depend on the number of electric points in the room but would be in the region of £500 per room plus the cost of the secondary meter (costs above).
To have each room provided with its own separate power supply by the power company is not something I have done. The last time I enquired to do this it cost in the region of £2K per supply or room depending on the distance from the supply. I was recently quoted £15K to fit an additional supply into a property. Then there is the cost of wiring up each room which is a similar cost as (2) above. However, by providing each room with its own power supply the risk of non-payment due to fraud is down to the power company. Where I have managed properties which have their own supply paid directly to the power companies, we have experienced enormous difficulties in getting the supply transferred to the new tenant and even lost tenants due to the problems of transferring the supply. There is no such problems with using electric sub meters.
How do you manage your utilities so they do not get out of hand?
I have the gas, electric and water meters read weekly. I set a weekly average per occupant of 20 units (kwatt)of electric, three units (cubic meters) of gas and where the water is metered one cubic meter of water per person. Appreciate I do not have any HMOs with less than five tenants. If it was a small HMO I would expect greater usage to cover communal costs. So for a six bed HMO I would expect no more than 120 units of electric, 18 units of gas and 6 cubic meters of water to be used in a week. Anything in excess or out of the normal would result in investigation. One of the costliest faults I have found is when someone leaves a hot tap running. Something as minor as this can cost you over £100 per week in extra cost for water and gas. It only has to be a steady trickle and the water and gas usage (all my water is heated by gas) goes through the roof. At least if you check it weekly you can quickly put a stop to any excess use.
Would you be better off having a water meter fitted to your HMO?
I have two of my HMOs fitted with water meters and have found that each tenant uses around about £20 per month. I would never have a water meter fitted in my property as in my experience the cost of water is over twice, sometimes far more than an unmetered supply. In one instance I had a bill of nearly £1,000 extra when a tenant broke the water pipe and flooded the cellar. Not only did I have the flood to contend with but it resulted in dry rot.
Even on your calculations a 5 room HMO would cost £1200 pa compared to my average water rates of about £300pa or £5 per month per tenant and no risk of excess charges should a leak occur.
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.