Liz Truss may have promised to freeze energy bills at an average of £2,500 a year but many students – or their parents – could still be hit with surprise extra bills for going over their limits.
If you, or your offspring, are privately renting student accommodation with bills included, read the small print very carefully, and if in any doubt, ask, as it might not be quite as good a deal as it seems.
Many students will be unaware that in most agreements with student letting agents, the energy included is typically subject to a fair use policy – a cap or allowance – that is often based not on units of energy consumed but on sums of money spent.
For example, it might be that with a shared house each student is allocated, say, £350 for gas and electricity for the year, with anything extra going on the tenants’ account.
These sums, which may have seemed generous in the past, are being rapidly eclipsed by the rising price of gas and electricity.
View image in fullscreenUsing the washing machine without thinking about energy efficiency could prove costly. Photograph: Lynne Sutherland/Alamy
Many agents that supply student housing publish their fair usage policies online, although you need to check if recent events mean the allowance has got better or worse. Examples we found included a maximum amount of £3,600 for a household of nine tenants in Manchester, and an agent covering Birmingham, Nottingham and Bristol that had a fair use policy of just shy of £1,800 for three tenants. The £350 allowance for each person highlighted earlier was a letting agent in Liverpool.
The government’s £2,500 figure for the bill freeze is based on a “typical” household on a dual-fuel deal with “median consumption”. For bigger properties and households that use lots of energy, it could be (a lot) more.
Students, who are often cooking, running the washing machine or heating their rooms separately, may consume much more – and that could mean they, or their parents, facing a “bill shock” blow further down the line.
Sophie Lang, a regional executive for Propertymark, the property agent membership body, says that agents “should be alerting tenants to the small print of their contracts and what it could mean for students … These tenancies were agreed months ago.”
Some agents have said they plan to visit their student properties to show the tenants how to be more energy-efficient.
Victoria Tolmie-Loverseed, of the student housing charity Unipol, says there is no legal obligation for agents or landlords to update their fair usage policies to reflect changing prices.
She recommends that students read their tenancy agreement carefully and “get advice on anything you do not understand. If you have obligations to pay for energy over a certain threshold, make sure to record regular meter readings and ask the landlord about 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 of the energy bill rises.
Four people living together, all with different attitudes towards energy usage, could be a recipe for rowsInteractive Investor’s Myron Jobson
Speaking before the most recent government energy announcement, a spokesperson from Unite, one of the UK’s biggest student accommodation providers, told us: “We have forward-purchased utilities on competitive terms, meaning we can offer students significant savings on their bills as part of a simple, fixed, all-inclusive rental payment.
“Given increases in energy prices, we estimate that students living in shared houses will pay about £840 a year for their bills including utilities, wifi and contents insurance. These same services will cost Unite students less than £600 for each student for the 2022-23 academic year. We pass these savings on to students through a single rent price, fixed at the time of booking.”
If you are in a privately rented student house, choose your flatmates carefully.
“Four people living together, all with different attitudes towards energy usage in relation to bills, could be a recipe for rows,” says Myron Jobson, a senior personal finance analyst at the financial platform Interactive Investor.
“And with each having a vast array of electronics ranging from a mobile phone, laptop, TV and video games console, together with shared amenities, it will become expensive.”
While energy bills do not usually affect credit files, accruing debt on your account because one of you cannot pay, may do. For the same reason, be careful about signing up for a joint account to pool money for bills. Once you take out a financial product with someone else, their credit file could affect yours, potentially for years, which may leave you struggling to borrow in the future.
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