Can landlords charge tenants for energy at a profit?

Two different situations

Reselling means a landlord buys gas or electricity from a licensed supplier and passes it on to someone else, usually through a sub-meter or an inclusive service charge. Ofgem sets a maximum resale price (MRP) for this, but it matters who the customer is.

Domestic tenants

For domestic use, the price per unit must not exceed what the reseller paid the supplier, including a fair share of standing charges. In effect, no profit on the energy itself. Costs such as billing and maintaining on-site networks or sub-meters are not part of the cap and may be recoverable separately.

Business tenants

Ofgem's October 2025 call for input says the MRP only protects domestic use. Energy resold for non-domestic use, such as to shop or office tenants, is not covered, and Ofgem was asking whether to extend protection to some or all business customers. The call for input closed in December 2025 and, when we checked in November 2026, Ofgem's page showed no published decision.

What protects a business tenant

• Your lease. Check the service charge or utilities clause for how costs are worked out and whether the landlord must pass costs on at cost.
• Evidence. Ask for the landlord's bills and the sub-meter readings.
• Negotiation. Many commercial leases are negotiated, so you can ask for at-cost wording when renewing.
• Not the Energy Ombudsman. Ofgem says the Ombudsman does not cover resale disputes, and Ofgem does not generally handle individual complaints.

Worked example

A landlord pays 27p/kWh plus a standing charge of £1.00 a day for a building shared by four units. A tenant uses 4,000 kWh in a year on a sub-meter.

• Energy: 4,000 × £0.27 = £1,080.
• Share of standing charge (a quarter): £1.00 × 365 ÷ 4 = £91.25.
• At-cost total: £1,171.25.
• If the landlord bills 32p/kWh: 4,000 × £0.32 = £1,280 plus £91.25 = £1,371.25, which is £200 above cost.

For a domestic tenant that £200 would breach the cap. For a commercial tenant it depends on what the lease says.

Landlord obligations

No licence is needed simply to resell, though reselling across separate premises needs a licence or an exemption. Landlords should also be clear in writing about how charges are calculated. Read our landlord business energy guide.

How VAT applies to recharged energy depends on the lease and the landlord's VAT position, so ask an accountant rather than assume.

Practical advice for landlords

Even where no statutory cap applies, charging a margin you have not disclosed is a recipe for disputes. A clear utilities clause, copies of the underlying bills and sub-meter readings, and a fair split of standing charges keep relationships healthy. If you want to recover metering, billing or network upkeep costs, say so openly and show how they are calculated, rather than hiding them in the unit rate. Ofgem has been reviewing the rules, so watch for announcements and check whether any new requirements affect you.

Next steps

1. Tenants: read the utilities clause and request supporting bills.
2. Landlords: keep bills, meter readings and a written method.
3. Both: see who pays for empty premises and business versus domestic energy.

Biz Energy is independent and not affiliated with any supplier, broker or comparison site, and takes no commission. This is general information, not legal, tax or financial advice.