Agents and landlords are being warned by a government minister not to charge all-inclusive HMO tenants more than necessary in a bid to recoup higher energy charges.

HMOs, student shared accommodation and some non-mainstream purpose built rental developments offer all-inclusive tenancies, many of which will have been negotiated before the high spike in energy costs were known.

Now Eddie Hughes MP, a junior housing minister, says: “Many private tenants are responsible for choosing their provider for energy, broadband and other services and therefore for paying their own utility bills. An all-inclusive tenancy is where the tenant is charged rent and other bills such as utilities as one payment. In addition to rent this may include utility bills, phone / broadband bills, Council tax, TV licence, and other services.

“Where the landlord is responsible for paying the energy supplier and bills the tenant separately to rent, the landlord can only charge for the ‘maximum resale price’ which includes the energy the tenant has used, the tenant’s share of the standing charge, and the VAT owed.

‘In February 2022 the Government announced a £9.1 billion energy bills rebate package, worth up to £350 each for around 28 million households. Domestic energy customers in Great Britain will receive a £200 reduction in energy bills this Autumn, which will be paid back automatically over the next five years.’

Hughes was responding to a question from Labour MP Steve McCabe who asked what assessment had been made by the government of the potential capacity of a (a) landlord or (b) letting agent to increase a tenant’s utility bill midway through an Assured Shorthold Tenancy contract.

Official guidance from energy regulator Ofgem says that if the reseller (in this case a lettings agency or landlord) underestimates the cost of energy “it is obviously entitled to recover the amount undercharged from the customer”.

But it warns that anyone charging above the maximum resale price may face civil proceedings for the recovery of the overcharged, complete with interest.