Who pays energy for empty commercial premises?

The starting point

There is no single rule that says who pays. It follows who has control of the premises and who holds the supply contract. In general:

• While a tenant occupies under a lease, the tenant pays for what they use, unless the lease says energy is included in rent or service charge.
• Once the lease ends and the keys are returned, the landlord or owner is the party responsible for the supply.
• During a gap between tenants (a void period), standing charges can still build up even if nothing is used.

Check the lease, any surrender agreement and the handover paperwork. This is general information, so ask a solicitor if there is a dispute.

What happens with the supplier

Ofgem says that if you move into premises without agreeing a contract, you may be placed on a deemed contract, with rates that can change more often, and you can choose a contract at any time. The same applies to a landlord taking a building back. See moving premises and deemed contracts and how much more deemed rates cost.

Worked example

A landlord's unit is empty for 3 months. The supplier puts it on a deemed rate with a standing charge of £2.00 a day, an illustrative figure. Standing charge alone: £2.00 × 91 days = £182, before any energy used. If the landlord instead agrees a plain fixed contract with a £0.60 daily standing charge, the same period costs £54.60. The gap is £127.40. Compare real rates with our out-of-contract cost calculator.

Practical steps for landlords

1. On the last day of the tenancy, take final meter readings with the tenant present, ideally with photos.
2. Tell the supplier of the change of tenancy and who is now responsible.
3. Agree a contract for the void period and check switching rules if there is debt.
4. Switch off what you do not need, but keep protection such as fire alarms and frost heating if required.

Practical steps for tenants

• Close your account properly: see closing a business energy account.
• Give a final reading and keep proof.
• Check who owes a final bill: the supplier may chase the person on the account. See who pays if the previous tenant left debt.

Other rules for empty premises

Empty property that is not being let needs no action under the energy-efficiency (MEES) rules until it is let again. Business rates and insurance are separate matters.

Common traps

Three situations catch people out. A tenant leaves without closing the account, so the supplier keeps billing the old name and the landlord inherits confusion. A landlord assumes nothing is billed while a unit is empty, then finds standing charges and a deemed rate accumulating. And a new tenant moves in before agreeing a contract, which can place them on a deemed rate from day one. Writing the meter readings and dates into the handover paperwork prevents most arguments.

Next steps

Read our landlord guide, and make sure someone is named on the account before keys change hands.

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.