Every landlord letting rooms hits the same fork in the road. Do you fold the energy into one rent figure? Or fit sub-meters and bill each tenant for what they actually use? Both are legal. They suit very different houses.
Bills included or sub-metered, which is better for a House in Multiple Occupation (HMO)? Bills included suits small shared houses where the wiring cannot be split cleanly. Sub-metering suits self-contained flats and any unit on its own circuits. The real question is who carries the risk of a cold winter, you or the tenant.
Last updated: August 2026. Ofgem’s resale rules apply across Great Britain. The tenancy fee rules below are the England ones. Wales and Scotland each work differently.
Key Takeaways
- Bills included means you buy the energy and carry the cost. A hard winter lands on you, not the tenant.
- Sub-metering moves the usage risk to the tenant, but only works where the circuits can be split by unit.
- If you charge separately for energy, Ofgem’s resale cap applies. If the rent simply includes it, there is no resale to cap.
- In England a separate energy charge is allowed, as long as the tenancy agreement sets it out from the start.
- Any meter you bill from has to be of an approved type.
What does bills included actually mean?
You buy the energy. The tenant pays one rent figure and nothing else. There is no meter reading, no monthly statement, no argument in February.
That simplicity has a price. You are now the one guessing what the winter will cost. Guess low and you eat the difference. Most landlords build a buffer into the rent.
It also removes any reason for a tenant to switch a heater off. That is the part landlords underestimate.
Which one costs you more?
Here is an illustrative example. Take a five bed shared house. Say you budget £70 a room each month for energy, so £350 across the house.
Summer is fine. You might spend £220 and keep the rest. Then January arrives and the real bill is £520. You are £170 down that month. String a few of those together and the margin you built in has gone.
Sub-metering shifts that. The tenant who runs a heater in a bedroom all day pays for it. The one who is out at work all week pays less. The usage risk moves to the person holding the switch.
It does not move every risk. Your name is still on the supply contract. Unpaid bills, empty rooms and the monthly admin all stay with you.
Then there is the wiring. In a house let by the room, the sockets and lights usually cross between bedrooms. A meter on one circuit reads a mix of rooms. Splitting them means an electrician and real money, which is why the sums often fail in a small house. Our guide to how many sub-meters an HMO needs works through that count.
| Bills included | Sub-metered | |
|---|---|---|
| Who carries a cold winter | You | The tenant |
| What the tenant pays | The same every month | Their units, plus a share of the standing charge |
| Set up cost | None | Meters, fitting, and rewiring if circuits are shared |
| Work each month | None | Read the meters, work out the split, send it out |
| Effect on how much gets used | Usage tends to climb | Usage tends to fall |
| Suits | Small room lets, student houses, short lets | Self-contained flats and units on their own circuits |
What do the rules say about each?
Charge for energy separately and you are reselling it. Ofgem’s Maximum Resale Price rules then cap the price at what you paid your own supplier. You cannot add a margin to the energy itself. Where a unit cannot be metered, Ofgem allows a fair estimate instead, tidied up later against the real figures.
Fold the energy into the rent and nothing is being sold on, so that cap has nothing to bite on. Ofgem says so directly for accommodation let with all bills included. This is the part landlords get excited about, and it is worth being calm here. You are not making free money. You are taking on the price risk instead.
In England there is a second rule. The Tenant Fees Act 2019 lets you charge a tenant for a utility, as long as the tenancy agreement sets that charge out. Utility there means electricity, gas or other fuel, water or sewerage. So a separate energy charge is perfectly allowed. It just has to be in the agreement, not sprung on someone later.
The care is needed at the advertising stage. From May 2026 a written advert has to state a specific rent, and you cannot take more than you advertised. Hiding a compulsory extra charge until later can also fall foul of the price transparency rules. Say which model you are using in the advert and in the agreement, and you are on solid ground. Wales has its own Act to similar effect, and Scotland has a different regime again.
When is bills included the right call?
Go inclusive when the house cannot be split fairly. If one circuit feeds two bedrooms and the landing, no meter will give you an honest number.
It suits short lets and student houses. Tenants who stay nine months do not want a final bill chasing them in July. You can price the energy into the rent and advertise a single figure.
Then there is your own time. Reading meters and sending statements every month is real work, and on a small house it can cost more than it saves.
When does sub-metering win?
Sub-metering wins wherever a unit stands on its own. Self-contained flats in a converted house are the clear case. Each flat has its own consumer unit, so one meter per flat tells the truth.
It wins again where usage is wildly uneven. A tenant working from home with an electric heater can use far more than the room next door. Splitting that equally is not fair to anyone, and inclusive rent just hides it inside your margin.
And it wins when energy prices are jumpy. Fixed rent plus rising costs is a squeeze. Metered billing passes the change through as it happens.
Metering also gives you evidence. When a tenant queries a bill, you can show the reading, your own supplier price and the sum you did. Keep the supplier bill that proves the rate. Our guide to billing HMO tenants from a sub-meter covers how to build that bill.
“In our experience the landlords who regret going inclusive are the ones who set the rent in summer. They budget on a quiet month, then the first cold snap eats the margin. If you are going inclusive, price it on your worst quarter, not your best.”
Meters UK technical team
Common Mistakes to Avoid
A few traps show up again and again on this decision.
Setting an inclusive rent from a summer bill is the costly one. Price it on your worst quarter and you will still be smiling in January.
Fitting meters before checking the circuits wastes money. If the wiring crosses between rooms, the meter reads a mix and the bill cannot be defended. Get an electrician to look first.
Billing from a meter that is not of an approved type undoes all the rest. Check the approval markings before you buy, not when a tenant asks.
Leaving the model out of the advert and the agreement causes trouble later. Decide which one you are using, then put it in writing at the start.
Relying on a fair use clause you have not thought through is the last one. It only helps if it is clear and fair. Spell out the allowance, how it is measured and how any excess is worked out. Charging for that excess is itself a resale of energy, so the Ofgem cap applies to it.
Is there a middle ground?
Yes, and it is the option most landlords miss. Meter the property, include the energy in the rent, and use the readings to set next year’s rent properly.
The tenant gets a simple all in figure. You get real numbers instead of guesswork, and you spot the leaking immersion heater before it costs you a season. Prepayment is worth a look too, where the worry is arrears rather than fairness.
