The first step is to understand whether the household is responsible for paying the energy bills or whether the rent is "all-inclusive".
If students are paying the bills directly, they will need to nominate a bill-player and organise a budget.
Students should also take meter readings when they move in and understand the impact of their energy usage on bills.
Support for student energy bills in 2022
The unprecedented spike in global energy prices has left all properties, including student households, with rocketing energy bills.
We go into the different types of energy deals students can get below, but it's worth pausing here mention the support the UK Government has provided for energy bills that may benefit students:
- From October 2022, all UK households will receive £400 credit to their energy account delivered over six months under the Energy Bills Support Scheme
The important thing to note about this £400 is that it will be credited to the energy account, so some students may benefit if they pay their energy bills directly.
There are two different scenarios to think about:
- If a student household pays the bills (through their own direct debit, for example), the £400 will be credited to the meter and that will be deducted from their bills each month.
- If a student pays an "all-inclusive" rent to their landlord that includes bills, the landlord will get the £400 credited to the energy bill that they pay. They may not pass this benefit on to the student paying an all-inclusive rent.
So, whether a student household will benefit from this scheme depends on whether they pay their bills directly and whether their landlord offers a small rent cut if the bills are paid by them.
Given the sheer scale of energy price rises in October 2022 (and with further rises expected in January 2023 and potentially beyond), it's unlikely student landlords will lower all-inclusive bills - and they may try to increase them instead.
There's more on what to do in such a situation later in this guide.
Paying for energy bills as a student
Students generally face one of three scenarios when moving into student accommodation at the beginning of their academic year:
- They live in managed accommodation where their rent covers all bills
- They live in accommodation rented from a landlord but pay their own bills
- They live in accommodation rented from a landlord with all-inclusive rent
The first option is usually the situation first-year students find themselves in when they are allocated accommodation from their university. We won't cover this type of situation because those contracts are subject to different energy terms (i.e. a contract between the management company and the energy provider).
Let's take a closer look at the other two options.
Paying energy bills direct
Students can live in shared households where they pay rent to their landlord but then pay their bills (energy, water and broadband) separately.
In terms of energy bills, this means that:
- Students have to budget to pay their bills
- One of the students will be the named person on the household bill and provide meter readings (unless the property has a smart meter)
- The students will have control over which tariff they choose and can switch supplier if they want to
So, this type of arrangement is similar to renting a property from a private landlord after finishing university - and there is usually nothing a landlord can do to stop students doing as they wish with their energy tariff and supplier while they are living in the property. This depends on the contract, though, so be sure to read it carefully.
While this gives more control to students, it does have some downsides:
- Students will need to be organised and pay bills on time
- If energy prices increase, the students are responsible for paying the extra
This second point is key, and we look at it more below in our discussion of standard variable tariffs (SVTs). Essentially, if energy prices go up in this scenario, students must shoulder the increase, even if they're on a limited student loan or income.
Paying all-inclusive rent
All-inclusive rent means that energy bills are included in the rent that the student has agreed to pay the landlord.
From a student's perspective, this can be a good option because:
- They are paying a set amount for everything and don't have to budget for individual bills
- They don't have to choose energy tariffs or suppliers - their landlord does this for them
- They should be protected from energy price increases
On this last point, landlords will usually agree a set amount of rent including bills and this will usually be legally binding.
However, it's worth checking the contract for clauses about whether the rent can be increased under any circumstances such as a dramatic increase in external costs (such as energy bills).
It's understandable that a landlord seeing a huge increase in their costs may seek to pass that on to their tenants, so it's important to read the contract carefully.
Equally, although students can see all-inclusive deals as a licence to use as much energy as they want, this can also backfire if there are clauses about excessive usage.
Types of student energy tariffs
Student energy tariffs fall into the same major categories as other energy tariffs:
- Fixed tariffs
- Standard variable tariffs (SVTs)
As well as this, there can be differences if a property is on a prepayment meter, so we'll cover that too.
Before we get into those, it's worth noting that energy deals promising green energy and electric vehicle charging are available, yet these might not be appropriate for student households who are focused on simplicity and sticking to a budget.
Anyone interested in how green different energy suppliers are should read our guide to green energy plans and how they work.
Fixed energy tariffs
Until recently, fixed energy tariffs were the cheapest energy deals around and rewarded customers for locking themselves in a fixed deal with cheaper rates than were offered on variable tariffs.
This has changed due to the 2022 energy crisis and fixed tariffs are currently more expensive (if suppliers are offering them at all).
So, in this case, most student households are going to find themselves on variable tariffs rather than fixed ones - at least for now.
If students do find themselves on a fixed tariff, there are a few things to note:
- The price quoted when a customer signs up is the cost per unit of gas and electricity, so it isn't the total a household will pay
- Fixed terms are often 12 months or more
- Many fixed term contracts have exit fees if a customer wants to leave early
For students, then, the first problem that springs to mind here is the possibility of being tied into a fixed deal for 12 months when most students will only be in their accommodation for nine months of the year.
Exit fees are usually around £30 to £35 per fuel, so students leaving their contract early will incur extra costs of £60 to £70, usually at the end of the academic year when their maintenance loan has run out.
There are a select few energy suppliers who offer fixed energy deals with no exit fees. These are usually smaller suppliers, and the deals may not always be around.
We've got more information about moving home and your energy plan. While students are unlikely to take their energy supply with them, it's still important to understand the steps to go through to end an energy deal.
Variable energy tariffs
Standard variable tariffs (SVTs), also known simply as variable tariffs, are the default option for properties who haven't signed up to a fixed energy deal.
As we mentioned above, these tariffs have traditionally been more expensive, yet they are capped by the default energy price cap and are currently the cheapest deals on the market.
There are a few important things to be aware of about variable tariffs:
- Prices can go up and down quarterly based on regulator Ofgem's calculations
- Households can move away from an SVT at any time (either to another supplier or another tariff with their current supplier) but that's unlikely to be an option for many in the current climate because suppliers aren't generally taking on new customers
Some energy suppliers like Bulb make a virtue out of only offering a variable tariff which rises and falls in line with wholesale energy prices. They say this simplifies things for customers, so it's worth remembering not all providers will offer fixed tariffs.
Some students will move into homes with prepayment meters rather than traditional post-credit meters.
It's clear why this is attractive for both landlords and energy companies. Requiring students to top up before using gas and electricity avoids any debt being associated with the property and ensures energy companies are paid.
Prepayment meters aren't inherently a bad thing for students either. Some may find it easier to budget like that, although it could become an issue if one person uses more energy than others and frequently leaves the meter close to the red.
While switching from a prepayment meter (or, indeed, the other way around) is an option, it's a hassle that students probably don't want to go through when they've got so many other things to think about.
So, perhaps the best thing they should do is economise on their energy use and come to clear arrangements with housemates about energy top-ups and bill-sharing. There's more advice on keeping energy bills down later in this guide.
Energy advice for the beginning of the academic year
Even if students aren't planning on switching their energy provider, it's still important they take some basic steps when moving into their accommodation.
This will ensure there aren't any problems hanging over from the last tenants and that all housemates understand the rules and responsibilities.
Note: If a student household has all-inclusive rent, these steps are slightly different but it's still important to know where you stand by taking meter readings and understanding how the arrangement will work.
Take a meter reading
There's a lot to do on moving-in day, but make sure taking a meter reading is on the priority list.
If a student takes a meter reading (and takes a photo of it on their phone) on the day they move into the property, this will limit any arguments later with either the energy company chasing money from the previous tenant or the last tenant or landlord claiming the bill belongs to the new occupiers.
Hopefully, the evidence will never be needed, but it's important to make a record of it anyway.
Find out who energy supplier is
Second on the priority list should be finding out who the property's existing energy supplier is.
Sometimes this can be tricky, especially if the previous tenants haven't left any bills or letters waiting, but there's more information in our guide to switching supplier.
Once students know who their supplier is, the next step is to contact them. The energy company will give information about the tariff (usually their basic variable tariff) and ask for the meter readings.
Choose the bill payer
The subject of bills can be a thorny subject for students in privately rented accommodation, whether they're living with friends or living with strangers.
Energy companies require a named bill payer, and for students on a post-pay (rather than a pre-pay) meter, this means someone stepping up to have the money taken from their account every month.
Sometimes, the person who is the most responsible will volunteer for the task. Other times, it might be a case of who puts up the least of a fight. Either way, it's important to put some guidelines in place about payment.
- When everyone else is going to pay the bill payer
- If the money will be put in a ring-fenced pot (many mobile banking apps offer the ability to separate money away from the main balance)
- What happens if something goes wrong with the payments
Remember, there are legitimate reasons why some students on tight budgets may struggle to pay their share of the bill on time. For example, a student with a part-time job who hasn't been paid on time may have a genuine reason to request help from their roommates.
Of course, this shouldn't be used a reason to spend extra on unnecessary items at the expense of paying the bills, but it's good practice to decide what will happen if all the money isn't transferred to the bill payer's account on time. So, will the other roommates make up the shortfall and how will this be paid back?
Having a plan in place to deal with any problems with energy bills (or any other shared bills) can alleviate some of the stress if something goes wrong. No one wants to call the backup plan into play, but student life for many is the first time a young person realises that financial plans don't always work out the way we hope.
There is one way of limiting any potential damage though: put a budget in place.
Put an energy budget in place
For students, making a budget and sticking to it is incredibly important.
While employees receive a set payment every month, even students with part-time or occasional jobs will have much less money going into their account than a typical employee. For those reliant solely on their termly maintenance grant, the importance of a good budget can't be overstated.
The energy element of a student's budget should be ring-fenced wherever possible.
The first couple of months will show what the household's energy consumption is, allowing all roommates to understand how much they should put aside for their fuel bills.
At the beginning of term when a maintenance grant has been paid, put enough money into a separate ring-fenced pot to cover that term's approximate energy bills.
A student who relies on a part-time job to keep them afloat financially while studying should set up a regular transfer to the ring-fenced pot, allowing money to be put aside before it can be spent on other things.
Read more about student budgeting and how to keep expenses low as a student.
How can students keep their energy bills down?
Like all homes, student households can save more money on their energy bills by adjusting their energy usage.
As many students haven't had to pay their own energy bills in the past, it might be a surprise to realise how much electricity is being wasted on gadgets that aren't being used or on computers left on standby. In a house of five students, for example, these issues could be multiplied by five, leading to a substantial waste of electricity and money.
One great method to see where electricity is being wasted is to use an energy monitor to see which appliances and gadgets are contributing most to the household's energy consumption.
These can start from around £50 which isn't a huge outlay when spread around a few housemates. Working out where electricity can be saved will usually save more than that over the course of a year.
Along with this, students could:
- Turn down the thermostat slightly and wear extra layers instead
- Charge their electrical devices on campus instead of at home
- Limit the length of their hot showers
- Cook at the same time as their housemates
- Use energy saving plugs and other energy saving innovations
Our top piece of advice for student households is the same as any other energy customer: check your meter readings regularly and make sure you're not underpaying your direct debit every month. That will avoid any nasty shocks if your energy provider requests a catch-up payment or increased monthly payments.
Summary: Know where you stand
Moving into a shared student house and being responsible for your bills for the first time can be an intimidating experience, so the best thing you can do in terms of your energy bills is to understand them from the start.
Ask the following questions:
- Are you paying the bills or is the rent all-inclusive?
- What energy tariff is the house on and who supplies it?
- Does the house have a prepayment meter?
- Do you need to allocate a bill-payer?
Energy bills are unlikely to be a student's priority when they move into a shared property. That's why setting ground rules on payments and how much energy is being used by gadget-hungry individuals early on can save tons of hassle later.
Finally, remember to budget for all bills and stick to that budget. It's the simplest way to avoid unnecessary stress as a student.