Liz Truss may have promised to freeze energy bills to an average of £2,500 a year, but many students – or their parents – could still be hit with surprise extra bills for going over the limits.
If you, or your offspring, are privately renting student housing with bills included, read the fine print very carefully and if in doubt, ask, as it may not be as good a deal as it seems.
Many students will be unaware that in most agreements with student rental brokers, the energy included is typically subject to a fair use policy – a cap or allowance – which is often not based on units of energy consumed, but on sums of money spent.
For example, with a shared house, each student may be allocated, say, £350 for gas and electricity for the year, with some extra in the tenants’ account.
These sums, which may have seemed generous in the past, are quickly overshadowed by the rising price of gas and electricity.
Many student accommodation agents publish their fair use policies online, although you need to check whether recent events mean the allowance has improved or worsened. Examples we found included a maximum of £3,600 for a household of nine tenants in Manchester, and an agent covering Birmingham, Nottingham and Bristol who had a fair use policy of just £1,800 for three tenants. The £350 allowance for each person highlighted earlier was a letting agent in Liverpool.
The government’s figure of £2,500 for freezing bills is based on a “typical” household on a dual-fuel deal with “median consumption”. For larger properties and households that use a lot of energy, it can be (much) more.
Students, who often cook, run the washing machine or heat their rooms individually, can consume a lot more – and that could mean they, or their parents, face a “bill shock” further down the line.
Sophie Lang, a regional manager for Propertymark, the estate agent membership body, says agents “should alert tenants to the fine print in their contracts and what it could mean for students … These leases were agreed months ago.”
Some agents have said they plan to visit their student properties to show tenants how to become more energy efficient.
Victoria Tolmie-Loveseed, from student housing organization Unipol, says there is no legal obligation for agents or landlords to update their fair use policies to reflect changing prices.
She advises the students to read the lease carefully and “get advice on anything you don’t understand. If you have obligations to pay for energy above a certain threshold, make sure to record regular meter readings and ask your landlord what it will cost. In a shared house, housemates need to communicate and work together to manage this, and budget together for any excess payments required.”
Freshers who are in halls are likely to be sheltered from the worst power bills.
A spokesperson from Unite, one of the UK’s largest providers of student accommodation, told us ahead of the government’s latest energy announcement: “We have repurchased utilities on competitive terms, which means we can offer students significant savings on their bills as part of a simple , fixed, all including rent payment.
“Given increases in energy prices, we estimate that students living in shared houses will pay around £840 a year for their bills, including utilities, wifi and contents insurance. The same services will cost Unite students less than £600 for each student for the academic year 2022-23. We pass these savings on to the students through a single rental price, set at the time of booking.”
If you’re in a privately rented student house, choose your flatmates carefully.
“Four people living together, all with different attitudes about energy use in relation to bills, can be a recipe for rows,” says Myron Jobson, senior personal finance analyst at financial platform Interactive Investor.
“And when each of them has a large variety of electronics, everything from a cell phone, laptop, TV and video game console, along with shared facilities, it’s going to be expensive.”
While utility bills don’t usually affect credit files, racking up debt on your account because one of you can’t pay can. For the same reason, be careful about signing up for a joint account to pool money for bills. When you take out a financial product with someone else, their credit file can affect yours, potentially for years, causing you to struggle to borrow in the future.