UK landlords add £161m to tenants' bills by not allowing them to switch energy suppliers

Landlords in the UK are adding at least £161m ($245m) to the bills of their tenants by stopping them from switching to their preferred energy suppliers, a survey suggests. More than one in 10 (13%) of landlords fell into that category, with the figure rising to nearly a fifth (19%) for owners with three or more properties.

Around 36% of landlords believe that by naming a "preferred supplier", tenants will not be allowed to switch, even if they find a cheaper deal. Energy regulator Ofgem states that while a preferred supplier clause can be used in rental agreements, tenants are under no obligation to use the named provider, while landlords and letting agencies cannot reasonably prevent them from doing so.

According to a survey from price comparison site USwitch, 43% of landlords who have prevented their tenants from switching say it is because it is their choice, with 40% wrongly stating the reason is because they included a preferred supplier clause in their tenancy agreements. The preferred supplier has led to confusion among tenants, with 39% incorrectly believing it means they must remain with the specified supplier.

Around 5% of renters in the UK –around 230,000 – said they have not switched their energy supplier because their tenancy contract prevented them from doing so. USwitch is now calling for an "urgent" review of misleading terms in tenancy agreements in wake of the findings.

Ann Robinson, director of consumer policy at USwitch said: "Landlords who unfairly refuse tenants their right to switch are standing in the way of more affordable energy for millions of homes.

"With a £339 difference between the average standard tariff and the cheapest deal, there has never been a more important time to help the growing population of renters tackle the sky-high cost of energy. Given that tenants are half as likely to switch as homeowners, any measures to break down the barriers and encourage them to take more control of their energy will reduce bills by millions."

A government spokesperson said: "There's no reason why landlords should deny tenants choosing a supplier for a service they themselves are not using. Consumers have a choice and families are wise to shop around for the best deals. When entering into a tenancy agreement, tenants should check who is responsible for paying electricity and gas bills and notify meter readings to the utility company."