Further to the article on Utility Warehouse found here, there have been some important updates to their stance on rented properties.

Due to continued growth and success of the Utility Warehouse within the domestic utility market, Telecom Plus Plc (the company behind UW) has now stated that rented properties are a segment of the market where they are potentially losing money. Mainly due to the fact that; 1) there is a much larger admin burden for this type of customer, 2) They tend to take lower margin services, and 3) they have the highest bad debt record of the customer base.

As a result, new tenanted properties are now required to take a £100 deposit for every service taken, which is obviously not something a tenant is going to be prepared to do.

So is this opportunity dead for Landlords?

Easy answer to this is – No.

Many investors have been introduced to Utility Warehouse though other property investors, as it was a great bolt on business by adding a small amount of residual income to their current property portfolio. However by just adding say 20 or so properties, the income generated from these will not excite many investors.

Even though the introduction may have been through property, the true benefit of this opportunity comes from building a much larger business through word of mouth recommendation to others. So the recent changes within UW’s strategy will further concentrate people’s effort in bringing in high quality customers into the business which will guarantee the longevity of both the company’s continued growth and also their own Utility Warehouse business.

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The Times have reported that landlords could be made liable for unpaid water bills for tenants who have departed under a government review of water charges.

The proposal comes amid plunging profits and rising bad debts at quoted water companies. Northumbrian Water reported a 10.3 per cent fall in pre-tax profits to £152.7 million for the year to March 31. This was slightly ahead of analysts’ forecasts of £150.7 million.

John Cuthbert, its managing director, said that the company had increased its provision for bad debt from domestic users by £2 million to £30 million. Demand for water and sewage services fell by 1 per cent last year. He said that water companies were vulnerable to bad debts among consumers because they were not permitted to disconnect their supply for non-payment. This meant that their bills tended to be the last ones paid.

Recovering outstanding debt from tenants was particularly difficult. “Quite often by the time we have found out who the tenants are, they have gone,” Mr Cuthbert said. “We are talking to the Government about what help they can give us here. One proposal would be to make the landlord liable.”

The proposals to make landlords liable for water bills at their properties have been drawn up by Ofwat. They would require property owners or managing agents to identify who is the “liable person” for water charges at any property. A spokesman said: “The occupier will always be the first person liable, but, as things stand, there is no incentive for the landlord to tell the water company who the occupier is and without this information the water company cannot bill anyone.”

The new rules, which would require primary legislation, would give landlords an incentive to provide details of the tenant or face paying an outstanding bill themselves.

Ofwat has submitted the proposals to Anna Walker, chief executive of the Healthcare Commission, who was asked by the Government last summer to conduct a review of charging and metering for water and sewerage services.

Thames Water, which serves 8.5 million drinking water customers in London and the Thames Valley, welcomed the proposals and said that bad debt and write-off costs increase the typical household bill by £11 a year. “Landlords take damages deposits up front from their tenants and so they are in a better position to recoup outstanding debts if needed,” a spokesman said.

Richard Jones, secretary of the Residential Landlords’ Association, said that rents would have to rise to cover landlords’ extra exposure. “We are already concerned about how money can get held up in the new tenancy deposit regime. If you end up with a dispute resolution service, excessive procedural requirements are being put on landlords. Cases are being thrown out on technicalities,” he said.

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