A new report from Hamptons reveals that the average annual energy costs for tenants have surged to the equivalent of an extra month’s rent each year, highlighting a significant increase in the financial burden faced by renters across the UK.

Energy Costs Reach Parity with Rent
According to Hamptons, average annual gas and electricity bills for tenants peaked at the highest level in seven years, reaching £1,331 for the typical rental home over the 12 months leading to Q1 2024. This amount is just £1 more than the average monthly rent across Great Britain, which stands at £1,330. The last occurrence of this parity was seven years ago, demonstrating a stark increase in living costs for tenants due to energy expenses.

Trend Reversal Expected with Price Cap Reduction
Despite the current high costs, there is a silver lining. Following the government’s recent decision to lower the energy price cap, average bills are expected to decrease by 12%, with a further reduction anticipated in June. Hamptons suggests that this could represent a high water mark for energy bills, potentially alleviating some financial pressure on tenants.

Political and Market Dynamics
The spike in energy costs over the past two years has been significant, with Hamptons reporting a 46% increase in energy bills alongside a 54% rise in rents over the past decade. Aneisha Beveridge, Head of Research at Hamptons, notes, “In the short term at least, falling energy prices are likely to see the issue drop down the political agenda.” She also speculates that with the upcoming potential change in government, there might be renewed pressure on landlords to enhance the energy efficiency of the properties they rent out, although current government policies seem unlikely to enforce minimum EPC standards for rented homes anytime soon.

This study underscores the escalating costs that tenants face not only in rent but also in essential utilities, posing challenges for affordability and living standards in the rental sector.