Scope: England and Wales. The maximum resale price is set by the energy regulator and applies across Great Britain; the tenancy rules around permitted payments differ in Wales — see the divergence map. Figures and directions change: check the current maximum resale price with Ofgem before setting a charge. Verified against the legislation on 14 August 2026.
Two arrangements, two different legal positions:
- The tenant has their own supply contract. They choose the supplier, they pay them, you are not in the chain. Simplest, and what most tenancies do.
- You buy the energy and recharge the tenant. You are reselling, and there is a maximum resale price you may not exceed.
The second is where landlords get into trouble, usually without realising there was a rule.
The maximum resale price
Where a landlord resells gas or electricity to a tenant, the amount charged is capped by a direction made by the energy regulator. In substance the cap is what you paid, and no more — you may pass on the cost, apportioned fairly, but you may not make a margin on the energy.
Practical consequences:
- No mark-up. Adding an administration margin to a recharged bill is the classic breach.
- Apportionment must be defensible. Splitting a bill between rooms in an HMO is fine; inventing a per-room figure that exceeds the total bill is not.
- Keep the bills. A tenant can ask what you paid, and the answer has to be evidenced — see record keeping.
- Overcharging is recoverable by the tenant, with interest.
Because the cap is set by direction rather than in the tenancy, a clause in your agreement permitting a higher charge does not help you.
All-inclusive rents
An all-inclusive rent is not a way around the cap. If the rent includes utilities, you are still reselling energy, and if a tenant challenges the utility element you need to be able to show it does not exceed what you paid.
This is common in student and HMO lettings and is usually handled with a fair use clause. A fair use cap is workable; what is not workable is treating the excess as a profit centre.
Prepayment meters
Where a prepayment meter is installed, the tenant is normally the customer and buys directly — you are not reselling and the cap does not bite.
What a landlord must not do is interfere with supply. Restricting or disconnecting a tenant's energy to pressure them is harassment under the Protection from Eviction Act, which is a criminal offence, not a billing dispute. That is true even where the tenant genuinely owes you money.
What you cannot charge at all
Separately from the resale rules, the permitted payments regime limits what a landlord or agent may charge a tenant. Most fees are prohibited outright; utilities, communication services and council tax are permitted payments where the tenancy provides for them.
So the sequence is: is this a permitted payment at all, and if it is energy, does it exceed the maximum resale price? Both have to be satisfied.
Switching supplier
A tenant who pays the supplier directly generally has the right to choose their supplier, and a blanket clause forbidding switching is likely unenforceable. A reasonable requirement — tell you, and return the account to the original tariff type at the end — is a different thing from a prohibition.
Between tenancies is a different question
When the property is empty the standing charges and the council tax fall on you. That is covered separately in void periods, along with the unoccupancy clause that quietly suspends insurance.
Practical setup
- Default to the tenant holding their own supply contract unless there is a reason not to.
- If you recharge, keep every bill and show the apportionment on the invoice.
- Put fair use in writing, with a number.
- Take meter readings at check-in and check-out, with photographs, and put them on the inventory.
Check your tenancy agreement free — utility and charging clauses are among the ones we read.