Landlord energy supplies: the rules on recharging tenants

If you own or manage premises with tenants, whether that is a single building split into units or an industrial estate with several occupiers, you may end up holding the energy contract and recharging the cost. Whether you can add a margin, and what rules apply, depends heavily on whether your tenants use the energy for domestic or business purposes.

This guide sets out Ofgem’s Maximum Resale Price rule, where it does and does not apply to business premises, and what an upcoming review might change.

Can a landlord charge more for energy than they pay?

It depends on the end use. Ofgem’s Maximum Resale Price (MRP) rule caps resale prices, but only where the energy is used for domestic purposes. Ofgem’s own October 2025 call for input on the rules is direct about this: “The MRP currently only applies when the end use is domestic.” Since Ofgem last reviewed the rule in the early 2000s, its stated reasoning has been that non-domestic consumers are better able to negotiate fair resale charges and can choose business premises based on energy costs, so business-to-business resale has been left outside the cap.

Ofgem’s guidance sets out a clear example of a scenario the rule does not cover: an owner of an industrial site reselling energy to business tenants. In that scenario, Ofgem confirms, “the MRP would not apply.” That leaves the price a matter of commercial negotiation between landlord and tenant, generally set out in the lease or licence to occupy.

So what does the Maximum Resale Price actually cover?

Where it does apply, domestic resale, the rule is a straightforward cost pass-through. Since 1 January 2003, the maximum price at which gas or electricity may be resold for domestic use has been the same price the reseller itself pays, including any standing charges, so a landlord reselling to a residential tenant cannot add a margin. Ofgem’s guidance covers common domestic resale scenarios directly, including a landlord reselling to tenants within the same property, caravan and park home sites, and houseboats.

What if my building has both business and residential tenants?

Mixed-use premises, Ofgem’s guidance gives the example of a flat above a shop, need care. The MRP only applies to the domestic portion of the supply. If you resell energy to a business tenant and a residential tenant from the same supply, you can only apply the resale cap to the residential tenant’s usage; the business tenant’s usage is unaffected by the MRP.

Two further carve-outs are worth knowing if you manage mixed-use or serviced premises:

• Inclusive or “all bills included” charges. The MRP does not apply where accommodation is let with an inclusive charge that covers energy, for example a rent that already includes “all amenities” or is marketed as “all bills included”.
• Dedicated EV chargepoints. Ofgem’s guidance confirms the MRP does not currently apply where electricity is resold specifically from a dedicated EV chargepoint, whatever the tenant’s residential status, though this is one of the things the current review is looking at.

What can a landlord recover from tenants beyond the unit price?

Even within domestic resale, where the MRP caps the underlying energy price, a landlord is not limited to only recovering the raw cost of the gas or electricity. Ofgem’s guidance says the MRP covers the reseller’s own unit rates, standing charges and metering fees, the costs actually charged by the supplier, but it does not cover additional costs the landlord incurs in providing that energy on to tenants, such as:

• billing administration
• maintaining an on-site private electricity network
• maintaining the landlord’s own sub-meters

Ofgem’s guidance says it is open to the landlord to determine how to recover these additional costs, though it notes that other housing regulations may also apply to how they are charged. For business tenancies, where the MRP itself does not apply at all, this distinction matters less, since price and any additional charges are simply a matter for the lease.

Is Ofgem reviewing these rules?

Yes. Ofgem opened a call for input on reselling gas and electricity on 9 October 2025, with a response deadline of 4 December 2025. Among the questions it is asking stakeholders, landlords, managing agents and tenants to weigh in on:

• Whether the current cost pass-through approach to the MRP delivers fair prices, or whether a benchmark tariff or price-cap-linked approach would work better.
• Whether the MRP should be extended to non-domestic situations at all, either universally or limited to a specific group such as microbusinesses. Ofgem notes that since 2003 it has already increased protections for microbusinesses and small businesses in other areas, which it says undermines the original assumption that all businesses can negotiate on equal terms with suppliers.
• Whether the EV chargepoint exemption should be narrowed, including for shared or managed workspaces and industrial units where a landlord resells power to tenants’ EV chargers.
• How enforcement should work, since Ofgem currently has no power to enforce the MRP itself. Its guidance notes that a consumer who thinks they have been overcharged has to pursue the reseller through the courts or tribunal service, rather than through the Energy Ombudsman, which is not available for pure resale disputes.

If you resell energy to tenants of any kind, it is worth watching for the outcome of this review, since a decision to extend MRP-style protection to microbusiness tenants would be a direct change to what commercial landlords can charge.

What if a tenant disputes what I have charged them?

Where the MRP does apply and a tenant believes they have been overcharged, Ofgem’s October 2025 call for input is candid that enforcement is weak. Ofgem sets the MRP but has no legal power to enforce it directly, and resale disputes fall outside the Energy Ombudsman’s remit, unlike a normal domestic or small business supply complaint. A tenant who cannot resolve a dispute directly has to take a claim to the courts or a tribunal service, with the process depending on whether the dispute is in England, Scotland or Wales.

Ofgem notes this creates a practical imbalance, since tenants, especially those renting from their own landlord, may be reluctant to take legal action. It is exploring with the Ministry of Housing, Communities and Local Government whether a new Private Rented Sector Landlord Ombudsman could eventually handle these disputes instead. For business tenancies, where the MRP does not apply in the first place, disputes over a recharge are a contractual matter for the lease rather than an energy regulation issue, though a poorly documented recharge is still more likely to end up in a dispute.

Does VAT change when I recharge tenants?

Recharging energy to a business tenant does not change the underlying VAT treatment of the energy itself, but it is worth checking your invoicing is set up correctly, particularly if any part of the premises qualifies for the reduced rate. Our guide to VAT on business energy explains the standard and reduced rates and the thresholds for qualifying use, which matters if you are apportioning a single supply across tenants with different usage levels.

Do I need a licence to resell energy to my tenants?

This depends on how the resale is structured, separately from anything to do with the MRP. Ofgem’s guidance explains that reselling electricity to consumers in separate premises, rather than within a single building, generally falls under the electricity supply licence exemptions regime. Class B of that regime specifically covers the resale of electricity between different premises, and a landlord operating under it takes on obligations as a licence-exempt supplier on top of any MRP requirements that might apply. This is most relevant to landlords running a private network across a site, such as several units on an industrial estate fed from one incoming supply, rather than a single multi-let building with individual tenant supplies.

What should landlords put in the lease or agreement?

Whether or not the MRP applies to your tenants, a clear written basis for recharging energy avoids disputes later. Good practice includes:

• Stating how usage is measured. Sub-metered actual use is easier to defend than an estimated split, especially where tenants’ operating hours or equipment differ.
• Setting out the calculation method. If you are splitting a single supply, state exactly how (for example, by floor area, by sub-meter reading, or equally per unit) so tenants can check the figures.
• Being transparent about what is included. Make clear whether the recharge covers only the energy cost or also billing and maintenance costs, consistent with Ofgem’s approach even outside cases where the MRP formally applies.
• Reviewing the position at change of tenancy. A new tenant moving into a unit is a natural point to confirm meter readings, the basis for any recharge, and who holds the underlying supply contract.

If you manage several let properties or units, our guide to multi-site business energy covers how to manage several supplies and contracts together, and our guide to reading a business energy bill explains what should be on the underlying bill you are recharging against.

A quick checklist for landlords

1. Establish whether your tenant’s use is domestic or business, since this decides whether the MRP applies at all.
2. If any part of the supply is domestic, price that portion at no more than you were charged, including standing charges.
3. Keep the calculation method and any additional charges (billing, maintenance, sub-metering) clearly separated and explained.
4. Check whether your set-up, particularly resale across separate premises, brings you into the licence exemption regime.
5. Watch for the outcome of Ofgem’s 2025 to 2026 review, particularly if any of your tenants are microbusinesses.

Once you know how your recharging arrangement should work, you can compare business energy quotes for the underlying supply contract with us.

Frequently asked questions