Energy suppliers don’t make a property manager’s job any easier as there are so many energy suppliers to deal with, each with their own processes and requirements, and lack of transparency in some cases. Water suppliers can be simpler to handle as these tend to be a single supplier, but the recent market de-regulation in England is already adding complications.
Change of tenancy
The change of tenancy (CoT) process for utilities can be complicated and protracted if it’s not something a business is familiar with. The simplest scenario is where the utility contracts are in the name of the property owner, who recovers these costs from the tenant via a service charge. In that case, when a tenant vacates, there is no need for a CoT.
However, it’s more common for tenants to arrange their own electricity supply where individual meters supply their tenanted area. When a tenant vacates, the costs revert to the owner/agent until a new tenant is found. In these situations, time is of the essence as the existing supplier will start charging the owner at deemed (higher than usual) rates until the CoT has been processed. For the CoT to be processed, it’s necessary to identify who the current supplier is, obtain meter readings and complete the individual supplier’s CoT process. In some instances, suppliers will take up to 28 days to process a CoT and often require evidence (such as copies of leases) before the CoT will be processed.
Whilst the property is empty, it’s good practice for the owner/landlord to agree a new supply contract which can be terminated once a new tenant moves in. However, agreeing a contract isn’t always simple as some energy suppliers won’t accept contracts for low usage/empty properties – or may charge a premium to do so.
Further complications can arise when tenants leave unexpectedly (e.g. if a business closes) and the owner doesn’t have details of the tenant’s utility agreements or debts can be outstanding. Most energy suppliers have very strict credit terms which means it can be difficult to obtain good pricing and credit terms for owners who for example register their holding company overseas or for tenants operating in high-risk sectors.
In properties with one main electricity supply its common for electricity costs to be paid by the owner/agent and recharged to the tenants. In properties where sub-meters are fitted to each occupied area, meter readings need to be taken so tenants can be charged based on actual usage. However, complications arise where there are no sub-meters fitted and/or where sub-meters don’t completely service a tenanted area (e.g. meters for air conditioning etc.) In these situations, a reasonable method of apportionment (such as on the basis of the area occupied) needs to be agreed.
Managing the utility supplies for commercial properties is time-consuming as it requires a lot of effort and coordination to get the costs correctly apportioned and recovered. But this is where TEQ Group can help.
What we can offer you?
At TEQ Group we closely with property owners and managing agents to manage their utility bills and services. We offer a wide range of services including:
- Managing change of tenancies
- A complete impartial utility tendering service for property owners and tenants
- Invoice validation and resolving queries with utility providers
- Calculating and preparing tenant energy recharge statements
- Preparation of energy budgets
- Utility meter installations and removals
- Energy monitoring and management
- EV (electric vehicle) charging points
To find out more contact TEQ Group today on 01423 815299 or click the button below and we’ll be happy to offer some advice.