Housing minister urges HMO landlords to raise rents proportionately

Housing minister Eddie Hughes has told HMO landlords and letting agents not to overcharge tenants due to rising energy costs.

Landlords with all-inclusive tenancies, where rent covers energy bills, will likely see their costs rise this year, as the energy price cap was hiked by 54% at the start of the month.

As a result a number of landlords are thinking of putting up the rent.

Labour MP Steve McCabe asked the government to clarify its position about landlords’ capacity to increase the rent through an assured shorthold tenancy contract.

The housing minister responded by saying that landlords are entitled to charge for the ‘maximum resale price’, meaning the energy the tenant has used, the tenant’s share of the standing charge, and the VAT owed.

Ofcom guidance says landlords and agents are “entitled to recover the amount undercharged from the customer”, however anyone who charges more than that amount may face civil proceedings for the recovery of the amount overcharged, as well as interest.

Rising energy bills

Even prior to last week’s uplift in energy costs, running an all-inclusive HMO was getting costlier for landlords, thanks to a growing work-from-home culture after the covid-19 pandemic.

HMOs typically generate better returns than other property types, but the rising cost of energy is hitting margins, combined with the slow uptick in interest rates from the Bank of England, which will slowly filter into higher mortgage costs.

The rising cost of energy is becoming a big issue in the UK, as thousands protested outside Downing Street last week, as well as in Cardiff and Birmingham.

Former Labour leader Jeremy Corbyn was among the protestors, saying: “I’m meeting people who are terrified of the next bill, so the very least we need is a price cap on energy, and then we need to say, well look at the profits of energy companies and look at the difficulties of people living.”

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