Almost four in ten (38%) of the UK’s nine million private renters avoid switching to the cheapest, fixed-term energy tariffs due to early exit fees****
Tenants missing out on the best deals could be overpaying £1 billion a year for energy
Uswitch.com data reveals that 80% of the top fixed tariffs include exit fees, yet suppliers rarely enforce these charges when tenants move out of a property
The equivalent of 230,000 renters haven’t switched to better deals because their tenancy agreement unfairly prohibits it
Uswitch.com is urging the Competition and Markets Authority to propose bold remedies to make the energy market work better for UK renters.
Confusion around energy tariff exit fees could be adding up to a staggering £1bn to private renters’ energy bills, according to new data from Uswitch.com, the independent price comparison and switching service.
Almost four in ten (38%) tenants could be unnecessarily languishing on expensive standard tariffs to avoid the early termination penalties which apply to 80% of the market’s cheapest fixed deals. Exit fees don’t apply to standard tariffs, which can be over £300 a year more than fixed plans.
The new figures indicate high levels of confusion among renters about their right to switch supplier and tackle high energy bills. Contrary to what consumers might expect, an analysis by Uswitch.com reveals that energy suppliers, in fact, rarely enforce exit charges when tenants move out of the property early, meaning millions could be missing out on huge savings.
Uswitch.com is urging the energy industry to do more to encourage tenants to switch to the cheapest deals and provide greater clarity about when exit fees apply. The Competition and Markets Authority, which is due to report on its energy market investigation later this month, should look to include bold proposals to tackle the barriers unfairly preventing tenants from exercising their right to switch.
Today’s figures follow a survey which revealed that more than one in ten (13%) landlords admit to denying private tenants their right to switch energy supplier, adding at least £161 million to bills. Uswitch.com’s ‘Right to Switch’ campaign was launched last year to help the country’s growing rental population get in control of sky-high energy costs.
Tom Lyon, energy expert at Uswitch.com, says: “Early exit fees are unnecessarily switching tenants off from moving to the market’s increasing number of competitive, fixed term tariffs. The number of renters continues to soar but, worryingly, tenants are half as likely as homeowners to take up the cheapest energy deals.
“We have called for an urgent review of misleading terms in tenancy agreements, better training for landlords and more information for tenants about their rights. Energy switching should not be out of reach for the people who need it the most.
“We would also like to see the Competition and Markets Authority, which is due to report this month on its ongoing energy market investigation, recommend bold measures to tackle the many barriers which unfairly prevent tenants from exercising their right to switch and save.”
Best buy dual fuel fixed deal plans paying by monthly Direct Debit, based on average energy consumption
| Supplier | Plan name | Average bill size | Tariff type | Early exit fee | |||
|---|---|---|---|---|---|---|---|
| 1 | Extra Energy | Fresh Fixed Price Feb 2017 v1 | £791 | Fixed | £50 | ||
| 2 | Places For People | Together – February 2017- fixed 30 | £793 | Fixed | £60 | ||
| 3 | GB Energy | Fixed 12 Emerald | £799 | Fixed | – | ||
| 4 | Gnergy | GnERGY Fixed February 2017 | £802 | Fixed | £50 | ||
| 5 | iSupply | iFix 201702 | £804 | Fixed | £60 | ||
| 6 | npower | Online Price Fix February 2017 | £805 | Fixed | £40 | ||
| 7 | So Energy | So Badger | £806 | Fixed | £10 | ||
| 8 | First:Utility | First Fixed March 2017 v3 | £817 | Fixed | £60 | ||
| 9 | OVO Energy | Better Energy (all Online) | £823 | Fixed | – | ||
| 10 | Flow | Connect4 | £824 | Fixed | £60 |
Source: Uswitch.com. Correct as of 20/01/16.
FOR MORE INFORMATION
Jason Wakeford
Phone: 0203 872 5612
Email: jason.wakeford@uswitch.com
Twitter: @UswitchPR
Notes to editors
Research was conducted by Opinium between 2nd and 7th September 2015, among a nationally representative sample of 500 private landlords and 1,000 private tenants in the UK.
When asked ‘Do you think that early exit fees would make you more or less likely to consider switching to a fixed-term deal?’ 38% of respondents answered less likely or much less likely.
Based on the 9 million renters in the UK (Source: Shelter, 2015), 38% (3,420,000) are put off switching to deals with early exit fees. 3,420,000 x £303 (price difference between average dual fuel big six DD deal and cheapest fixed plan tariff) = £1,036,260,000 (£1bn).
Eight of the ten best buy fixed term deals include early exit fees – see table in body of press release.
56% of tenants who were responsible for paying for their energy said their landlord/agent had prevented them from switching energy supplier, which equates to 230,315 tenants based on the total of 9 million private renters in the UK (Source: Shelter, 2015).
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