This blog post is an edited transcript of a video done by HMO Daddy, Jim Haliburton on Youtube.
Yes, it is - for some reason lots of landlords think it is illegal. The only thing that is illegal is to overcharge for the electric or to fit them yourself (all electric work has to be done by a qualified person). Electric sub meters will help you save on the cost of the electricity and do your bit for saving the planet.
My view is do not take anything away from an existing tenant unless you do it by negotiation. The way I get around it is to say to the tenant “we're going to have to increase your rent by 20 pounds or we're going to fit a pre-pay meter and we'll give you 10 pounds worth of electric free” - they will then have to choose between a rental increment of 20 pounds to cover the cost or reasonable usage (provided by the electric sub meter). That is for the existing tenants.
For new tenants, the prepayment meter would already be installed when they move in. In your advertising you must ensure that you do not say “all inclusive” and your tenant agreement must also state that the electricity is not included in the rent. You must change the advertising to say “except electricity” or “electricity excluded”. You save the cost of the electric and recover the cost of the electric by the charge on the prepaid meters.
The particular thing I like about the Metro Prepaid sub meters is you can pay online or any PayPoint shop whereas if you provide the older types of meters you have to sell the card to the tenants which creates another admin task. That's why I prefer the Metro Prepaid meters as opposed to the older type as it takes away the administration.
The other concern that landlords have when they do this (install electric sub meters) is image - I haven't had any problems with tenants whether it be professional, working or DSS when they walk into the property and they see they have to pay for their own electricity. So that's a problem you'll have to face up to yourself. Does it fit with the image you want?
One of the issues you will have if you're dealing with working or DSS tenants is they will steal the electric. You have to keep your eyes open for this by visiting your property on a regular basis, at odd times and you'll find that they often run extension leads from the communal areas or the kitchen into their rooms. The way I handle that is, quite nicely, tell them that they are stealing and should it continue, you will report them to the police. If they're not there, I take the extension lead and leave them a note making them aware that I know they are stealing as well as the dangers of this and request a meeting. Nice little tip.
Metro Prepaid Support