Utility switching and the energy crisis – the heat is on!
Lisa Isaacs looks at how utility intermediaries are evolving their packages for tenants and their commission offering to agents, during the energy crisis.
Since mid-2021, however, when wholesale energy prices increased rapidly and consumer spending demigod, Martin Lewis, told us we’re all doomed, we have become increasingly fixated on how much it costs to power and heat our homes. No longer do our eyes glaze over at talk of kWh. Sadly for agents, the contraction of the energy market has meant clients – tenants especially – have had no real incentive to move energy suppliers, with default standard variable tariffs almost exclusively offering better value for money than taking out a new fixed deal.
While the current impasse may have hampered energy referrals and resulting commissions – with many void period switching services temporarily paused – our new-found frugality sees the home moving masses poised to take action as and when they can save a few pennies. And as soon as there is a whisper of a discount or a fixed deal that undercuts the energy price cap, agents can be there to direct people to the right bill-reducing people.
2023 – the year of the unit
Returning to the banality of energy bills, Ross Nichols at Just Move In highlights our historically lackadaisical approach to gas and electricity. “A 2021 report by Virgin Red showed that 13 million households had never switched energy providers, so there is a huge amount of apathy in the market.” Is it all about to change? The general public have had to wise up very quickly when it comes to the nitty gritty of how our energy costs are calculated, and Ross says home movers are definitely more aware of what they’re paying due to the cost-of-living crisis.
A 2021 report by Virgin Red showed that 13 million households had never switched energy providers, so there is a huge amount of apathy in the market. Ross Nichols, Co-founder, Just Move In.
In good news, Ross can see movement in the energy market in the coming 12 months. This presents agents with an opportunity to talk to clients about utilities in a more positive light when moving home – especially those who are now paying particular attention to how much each unit of energy costs.
“We expect the market to open up in 2023, and there should be deals available, albeit the savings will be considerably less than before, for at least 12 months. It’s possible that some suppliers will be aggressive in their acquisition of new customers and there could even be a few discounts emerging.”
Fixing is back on the cards
PJ Darling at Ittria is already starting to see a shift in behaviour that may indicate room for manoeuvre in the imminent future. “Of those suppliers left in the market, most haven’t been taking on new customers, which means tenants moving into a new home have defaulted to the standard variable tariff – usually the cheapest option anyway,” says PJ. That is now altering as wholesale prices continue to drop and Government support weakens. “In the first two weeks of November, we saw a 288 per cent increase in tenants fixing tariffs with one of our preferred suppliers, Rebel Energy, rather than taking the default tariff.”
In the first two weeks of November, we saw a 288 per cent increase in tenants fixing tariffs with one of our preferred suppliers, Rebel Energy, rather than taking the default tariff. PJ Darling, Founder and CEO, Ittria.
Until there is major and widespread movement in the market – and perhaps the ability for suppliers to launch new deals at cheaper rates than standard variable tariffs –home movers are preoccupied with money – and their distinct lack of it.
Benefits and budgeting overtake price
If the traditional ‘save money by switching suppliers when you move home’ isn’t earning commission for agents, how can they generate extra income from referrals? Archie Lasseter at Utilita Energy says agents can become instrumental in recommending suppliers who help tenants budget, because the focus has shifted from companies competing on price (as it’s pretty much a level playing field thanks to the cap), to competing on value. “The coming year is going to be a hard one for millions of households who cannot afford to live how they did previously,” says Archie. “Moving home is a great time for tenants to consider what they want from their energy supplier – do they want to accept a credit agreement and pay by Direct Debit for their energy, or would they prefer to only pay for what they use each day? What does value look like to them?”
Utilita’s customers use around 11 per cent less energy as a result of using our Smart Score app and many opt to use Autopay, so they don’t need to remember to top-up. Archie Lasseter, Sustainability Lead, Utilita.
For Utilita, value comes in the form of its Smart+ PAYG product, which sees tenants only pay for the energy they use and avoid a fixed monthly direct debit. The deal is offered in tandem with proactive support to use less energy, emergency credits when users struggle to top up and no standing charges. “Our Smart+ PAYG offering provides more in terms of customer benefits than any credit tariff out there today,” adds Archie. “Utilita’s customers use around 11 per cent less energy as a result of using our Smart Score app and many opt to use Autopay, so they don’t need to remember to top-up. This is proving to be incredibly popular, as it takes away the admin, but they are still ‘energy engaged’ as they can see what fuel their home is using in real-time.”
Bill bundles increasingly popular
Budgeting is definitely something the One Utility Bill team understands, with its clients taking increased comfort from a more simple, streamlined approach to utility bills – even if there isn’t much room to save money. “The energy crisis has caused a lot of uncertainty and it’s no surprise that demand for bills-included properties in the Build to Rent sector has increased by 36 per cent, according to Rightmove,” says the company’s Chris Dawson.
One, fixed utility bill is definitely what home movers are looking for. We’ve had our biggest customer numbers to date in 2022, with over 25,000 renters bundling their bills with us. Chris Dawson, Co-Founder, One Utility Bill.
In such a volatile energy market, however, there are very few agents or landlords who are taking the risk with bills-included rentals. Chris says an ‘all-in-one’ bill is an alternative that agents can recommend to tenants – a single bill that the tenant pays instead of several separate bills arriving on different dates. Although multiple bills may amount to the same total as one combined bill, a single figure can feel more manageable when budgeting.
“One, fixed utility bill is definitely what home movers are looking for. In fact, we’ve had our biggest customer numbers to date in 2022, with over 25,000 renters bundling their bills with us and discovering it’s easier to budget this way,” says Chris. “Tenants have all their bills managed for them, just like a bills-inclusive property, and one monthly payment means they have the stability of easy-to-manage finances. There’s even our Unlimited Energy option, so there’s no over-usage fees or bill shock. There’s no need to worry about which utility comes out when, as they’re all paid at the same time every month.”
Lettings agents can connect tenants with One Utility Bill’s bundles in one of two ways. There’s the utility registration service called Notify, with commission paid for every qualified lead, and also a student referral service that offers a risk-free alternative to bills included, with commission paid when referred students sign up.
Bills included? Include clauses
Jack Ray at Billing Better agrees that the ‘bills included’ proposition is a risky challenge during an energy crisis. “Any agents still offering ‘bills included’ rentals should insert clauses within tenancy agreements that allow for energy price changes in line with the standard variable tariff, as well as a fair usage policy.”
Any agents still offering ‘bills included’ rentals should insert clauses within agreements that allow for energy price changes in line with the standard variable tariff. Jack Ray, Founder and CEO, Billing Better.
“If these are not covered within a tenancy agreement, the letting agent may find themselves in a difficult situation by having to increase rent payments, deduct from a deposit or risk having to pay out extra money for bills when prices go up – especially now the energy price cap has been cut short. It’s quite possible that because of higher energy costs and ‘excessive usage’ having a bigger impact than before, letting agents will be running ‘bills included’ properties at a loss.”
To counteract the risk, Billing Better has recently launched Homebox. This new product allows letting agents to still offer a rent and bills included service but without the risk of increased energy bill liability. “ A tenant – or group of tenants – pays one monthly amount to Homebox for their rent and bills, with all of the bills going into the name of the tenants,” adds Jack. “This way, 100 per cent of the rent is paid to the letting agent (or landlord) and the utilities are paid directly to the suppliers. A generous one percent commission on the total rent, bills and fee amount is paid to the letting agent, and tenants are incentivised to pay promptly with payments counting towards their credit score.” Billing Better also offers agents commission on its traditional utility set up and bundling service, with up to £10 paid per tenant, per month, subject to bills being successfully paid.
That’s entertainment
As well referring tenants on to all-in-one bill services, income is being earnt in the media switching arena, which is topping up earnings until the energy market rallies. After all, who doesn’t want to console themselves after looking at their smart meter by binge watching their favourite box set? Not only boosting an agent’s bottom line figures, The Tenant Shop is also saving renters as much as £80 when switching media packages – the current hook any agent needs when selling on a service. “As well as our media team having access to the latest prices and exclusive offers, we ensure tenants get a media package tailored to their needs, so they are not inadvertently overpaying for unwanted services,” comments George Potaris at The Tenant Shop.
As well as having access to exclusive offers, we ensure tenants get a media package tailored to their needs, so they are not overpaying for unwanted services. George Potaris Director, The Tenant Shop.
“Our excellent lead-to-sale conversion rate is currently 13 per cent and our best-in-market going live rate is currently at 90 per cent, so we are able to offer industry-leading commission rates to letting agents. This is between £20 and £25 for every live media sale, which is much needed additional revenue in these difficult times.”
TalkTalk’s identification of the strategic importance of the home move market has blossomed into a partnership with Home Telecom’s holding company, Telecom Acquisitions Ltd. Now in Home Telecom’s broadband stable is TalkTalk’s extended fibre, which enables clients to obtain the very best speeds and service, with flexible contracts that can tailored to each tenancy’s length adding to the appeal.
Use utilities, boost your income
There are plenty of companies out there keen to connect with estate and letting agents plug their pipes into properties on their books, whether it is traditional energy suppliers or broadband services, so make that connection and get the commission flowing – they’re waiting for you to turn the tap on!
