The government will remove gas standing charges from household bills for around 23 million homes, with Chancellor John Healey asking Ofgem to deliver the change in 2027 or as soon as possible after. The typical fixed charge of £108 a year will instead be recovered through unit rates.
The move was confirmed on 28 October ahead of the Budget, in a joint statement from the Prime Minister’s Office, HM Treasury and the Department for Energy Security and Net Zero. Ministers said 60 percent of account-holding households should save around £45 a year on average, while others will gain more control over what they pay because they will no longer face a daily fee even if they use no gas.
Heating bills for shared homes sit at the centre of the landlord impact. Homes in multiple occupation where rent includes utilities often run heating and hot water for long hours across several rooms, so a shift from fixed fees to higher unit prices can raise costs for high-use properties even as low-use homes pay less.
Ofgem to shift £108 fixed fee to unit rates
A standing charge is a fixed daily fee added on top of usage. A household could use no gas and still pay it. Under the plan, those fixed costs move to the per-unit price, which ministers say makes the system fairer and gives families breathing space.
John Healey, Chancellor of the Exchequer, said gas standing charges are unfair and outdated so he is scrapping them to give millions of households breathing space. Andy Burnham, Prime Minister, said the change is about basic fairness and giving people more control over bills as part of reforming the energy market to better serve the public interest.
This follows Landlord Knowledge’s report on the NRLA rental energy roadmap, which set out five priorities for meeting 2030 efficiency targets without overloading landlords. The standing-charge change runs alongside that longer retrofit pressure, altering running costs while capital upgrade rules are still being finalised.
HMO landlords face higher unit costs on bills-included deals
Contract type will decide who feels the change first. Many smaller shared houses run on domestic supply arrangements covered by Ofgem’s price cap on standard variable tariffs, while domestic fixed tariffs and commercial energy contracts sit outside that protection. Advisers often recommend commercial fixed deals for larger HMO portfolios for cost and admin reasons, but those accounts should not assume a domestic gas reform will apply to them.
For landlords on affected domestic tariffs, removal of the standing charge does not guarantee a lower total. If high consumption is spread across several residents with heating on through the day, higher unit rates can outweigh the £108 saving. Low-use properties stand to gain most. Fixed-rate terms still give price certainty during the term, but total spend still moves with use. Full detail is set out in the government announcement on gas standing charges.
Ministers also signalled electricity standing charges could face similar reform next year, after a VAT cut on electricity bills that took effect at the start of October. That cut left the October price cap £45 a year lower than it would have been, though around a third of households on fixed tariffs are not affected by the cap. Barclays research putting landlord energy upgrade costs at £9,000 shows why running-cost shifts matter alongside one-off retrofit spend.
What this means for landlords
- If you let HMOs with bills included: model rents on higher unit rates from 2027, not just the £108 saving, and check whether each property is on a domestic or commercial contract.
- Watch for: Ofgem implementation timing, any targeted mitigation for high-use or vulnerable cases, and a possible electricity standing-charge review next year.
- Bottom line: low-use lets should benefit, high-use shared homes may pay more, so review inclusive-rent levels and usage controls before fixing terms.
Editor’s view
Scrapping a flat daily fee sounds simple, but for bills-included landlords it swaps a known cost for a usage risk. Owners who can show efficient heating and clear fair-use terms will cope best when unit prices do the heavy lifting.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 30 October 2026
Sources: HM Government, Ofgem, HM Treasury, Department for Energy Security and Net Zero
Related reading: NRLA sets five priorities for 2030 rental energy roadmap
