The founder of a property industry utilities bills management platform has warned that many letting agents face significant shortfalls in revenue as the big power companies pull the void switching and tenant utility bill switching deals once common in the market.

Jack Ray, who set up BillingBetter.co.uk in 2016 and now has 400 lettings agencies on board, says many agents who have relied on ‘void switching’ deals are now ‘hurting’ as these revenues disappear.

“It’s a real kick in the teeth for some agents but the energy crisis we’ve faced since September last year is now beginning to really bite in the energy supplier market,” he says.

Void switching is when energy suppliers pay platforms and/or agents around £30-£50 (usually shared between them) to switch to a property’s suppliers during a void in the hope that the tenants stick with their deal after moving in.

“Letting agents have liked this in the past because they can control it – whereas switching energy suppliers for example during a tenancy is trickier as the tenants have to want to do it,” he adds.

The Neg understands that the two utility giants in the property market – SSE and Scottish Power – have as recently as this week pulled out of the switching market altogether, leaving agents, and the industry platforms that facilitate them, high and dry.

Portfolio income

And these are not small sums – for example a letting agency with a 200 property portfolio could be earning £3-5,000 extra revenue a year from void switching and general utility switching fees.

“It’s horrible for everyone involved, but particularly for the tenants who are now unable to switch and may be stuck on expensive tariffs during a cost-of-living crisis,” says Jack.

His firm takes a different approach to platforms like Goodlord, Vouch and even Boomin, all of whom split the referral revenues from utility provider switching fees with agents.

Utility suppliers

Instead, BillingBetter.co.uk bundles all of a household’s bill bills into one payment and then secures a deal from the utility suppliers based on volume, part of which is kept by them in the form of a daily mark-up of around 16p.

“We’re indirectly charging the tenant or homeowner £120 a year on average but although some may not like that approach, it’s a lot less than the huge bills that those stuck on high tariffs may be paying at the moment, and for some time to come,” says Ray (pictured).

“We’ve also been ensuring that our customers are kept on the standard variable tariffs rather than being funnelled towards the much higher non-standard rates.”

His platform also works with letting agents and built to rent operators to offer ‘bills included’ renting.