Electricity meter was installed, can I reduce my all inclusive rent without problems?

Question

The rent I pay is all inclusive (room, electricity, gas, water, internet, council tax, etc) however a few weeks ago the electricity company installed a pre-payment meter because the landlord hadn't been paying the bills (owed over £3k).

The management wants us to pay the meter and then reduce the amount of rent we pay by that much. The problem I have is that since we're now paying electricity separately, shouldn't we be paying less rent as now the electricity component of the rent is now not being supplied by the landlord/management.

After all, just because I'm not paying for the electricity this month, shouldn't that mean I pay the landlord/management for it as they aren't supplying it anymore if anything I should be paying the person that pays it.

So what's the official word on this?

Details:

• The management is a company that manages this property on behalf of the landlord.
• It's a flat-share
• We have a rental agreement.

Answer 1

As DJClayworth's answer explains, the offer the rental management has made ought to leave you paying the same total amount for rent+electricity: the idea is that the "all inclusive price" stays the same, and you pay some of that price to the electricity company and the rest to the landlord.

However, you should be aware of the following downsides to the arrangement, which might justify negotiating a further discount from that all inclusive price:

• Cashflow. Assuming you only deduct the amount spent on electricity in one month from the next month's rent, you are effectively paying up front for your electricity twice, and then only reclaiming some of the cost at the end of the month. So you'll be losing a bit of interest on savings/paying more interest on any debts you have.

• Credit risk. This follows on from the cashflow point: at the end of your tenancy, there won't be any more rent to pay and your landlord will owe you the final month's electricity costs back. If said landlord hasn't been paying the electricity company, can you be sure he or she will return your money?

• Inconvenience. Keeping the meter topped up, keeping track of how much you spend, etc, will be a real nuisance. Much less convenient than the all-inclusive deal you originally signed.

I'd also make sure that your deposit is properly protected under a deposit scheme, as is required by law.

Answer 2

You have misunderstood the issue.

since we're now paying electricity separately, shouldn't we be paying less rent as now the electricity component of the rent is now not being supplied by the landlord/management.

You are paying less rent. The landlord told you to pay the meter, and then reduce the rent you pay by that much. So if you put fifty pounds into the meter, you reduce your rent by fifty pounds. Less rent, just like you said.

More to the point, this arrangement means you total you pay (in rent and electricity) is exactly the same as it was before, which is also completely fair and legal.

(Incidentally, since electricity usually costs more when a prepayment meter is installed, your landlord is losing money on this - which is entirely as it should be, since it's his fault, but is a good indication that he is not ripping you off.)

There are other issues with this, including how your landlord came to be so far behind in the electricity bill that a pre-payment meter had to be installed (something that usually only happens in extreme circumstances). But the total you pay is not one of the problems.